Signia Invest Insights | November 2024
Market Review and Outlook
Markets posted an overall solid performance in November, with US equities bouncing back from their October losses as the S&P 500 hit another all-time high. The US presidential election on November 5th was the main event, which resulted in a clean sweep victory for Donald Trump across the seven swing states, and more importantly, across Capitol Hill with Republicans due to control both the House of Representatives and the Senate. That backdrop saw US equities do very well, and US equities outperforming once again and the S&P 500 rallying 5.7%, its strongest monthly performance of 2024 so far. Moreover, those gains were broad-based, with the equal-weighted S&P 500 seeing an even larger 6.4% gain. Several sectors saw a strong outperformance, with the KBW Bank Index also posting its strongest monthly performance this year, rising 13.6% in November alone. Other equity markets didn’t fare so well, with the Europe Stoxx 600 rising only 1.0%, whilst the Japan Nikkei 225 and Hong Kong HSI stock markets declined -2.2% and -4.4%, respectively.
Overall, fixed income assets performed well, with the global bond aggregate rising 1.3% in November. European sovereign bonds outperformed as investors priced in faster rate cuts from the ECB. But there were a few weaker spots in other markets, with French assets underperforming given the country’s budget situation, and the Euro itself posted its biggest decline against the US Dollar in 18 months as investors contemplated the prospect of further tariffs and trade wars with the incoming Trump administration.
Another continued theme into November was growing scepticism that the Fed would cut rates rapidly over the year ahead. That came as Fed Chair Powell said the economy “is not sending any signals that we need to be in a hurry to lower rates.” Then later in the month, data also showed core PCE at a 7-month high in October, coming in at a monthly pace of 0.27% and comfortably above 3% on an annualised basis. So there was growing concern that inflation was proving sticky and settling above the Fed’s 2% target.
Geopolitics was also in focus in November, as Ukraine made its first US-sourced ATACMS strike inside Russia, whilst President Putin signed a revision to Russia’s nuclear doctrine, allowing for a wider set of conditions under which they could use nuclear weapons. That led to growing fears of an escalation in the conflict, causing European natural gas futures to rise by 18% during the month. However, in the Middle East, a ceasefire agreement was reached between Israel and Hezbollah towards the end of the
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