EQUITY
November was a strong month for global equity markets, with the MSCI World up 4.5% in US dollar terms. The results of the US elections were the main catalyst for this performance, with US stocks being the primary beneficiaries. Meanwhile, European and Asian markets faced headwinds, largely due to ongoing concerns around trade tariffs under a Trump presidency, compounded by a strengthening US dollar, adversely weighting on performance in these regions.
The S&P 500 and Dow Jones industrial Average both had their best months for the year, returning 5.3% and 7.3% respectively, following October’s pullback. Within the S&P 500, all 11 sectors ended the month in positive territory, with the return profile widening beyond the “Magnificent 7” stocks. The cyclical sectors, such as consumer discretionary and financials were the standout performers returning 13.3% and 10.3% as they would benefit from a growing economy and potential looser regulation in the months to come. Conversely, defensive sectors, less reliant on a strong economy, underperformed, with healthcare being the weakest returning just 0.3%.
FIXED INCOME
Central banks around the world continued their interest rate cuts in November. The US Federal Reserve cut rates by 0.25% to 4.5-4.75%, in line with market expectations. However, following Trump’s victory, market expectations for the speed and scale of future rate cuts were tempered given the inflationary nature of his policies, which include trade tariffs, deregulation and tax cuts. This led to increased volatility in the fixed income market, though treasury yields quickly readjusted with the US 10-year falling 11 basis points to 4.17% for the month. The Federal Reserve’s decision appears to have been justified as non-farm payroll increased by 227,000 and unemployment edged higher to 4.2%.
In the UK, the Bank of England cut rates by 0.25% to 4.75%, with the Monetary Policy Committee (MPC) voting 8-1 in favour and one member preferring to keep rates at 5%. Governor Andrew Baily indicated that future rate cuts would be implemented on a more “gradual basis” due to ongoing uncertainties both globally and domestically, particularly following the UK’s Autum budget and labour market conditions. UK Gilts rallied over the month, with 10-year yields falling 0.20% to 4.24%.
COMMODITIES
Commodities underperformed relative to the wider market, with the S&P GSCI index rising only 0.33%. The agriculture and livestock sectors were the strongest performers, while industrial metals, such as aluminium and copper, experienced declines. Gold, traditionally seen as a store of value and more recently a hedge against dollar weakness declined 3.67% its worst decline since September of last year, despite this pullback, gold is up 28.12% year to date.
With the energy sector, ongoing geopolitical tensions particularly the war in Ukraine, drove European natural gas prices up 20% in November, reaching their highest levels in over two years. This surge was driven by fears over reductions and even cuts in Russian gas supplies. Brent Crude oil prices closed at $74.35 per barrel, marking the second lowest price in the last 24 months.
DIGITAL ASSETS
Cryptocurrencies, now being referred to as “digital gold”, experienced strong positive momentum following Trump’s election victory, with several coins reaching all-time highs. Bitcoin, the most popular cryptocurrency, rose 37%, flirting with the elusive $100k mark. Additionally, trading volumes within the crypto space has doubled since the election, as Trump announced plans for the US to become the crypto capital of the world.
CURRENCY
The British pound weakened against the dollar in November, ending the month at $1.269, compared to $1.289 at the start of the month.
