Macro: Sandcastle economics
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Investors give thanks for positive November market performance
Market Rewind
Søren Otto Simonsen
Senior Investment Editor
Summary: November’s market performance showed promise with rallying stocks and a slowing of rate hikes. Concerns still remain about signs of recession as well as possible supply chain and energy disruptions, but hints of future potential are peeking out from many corners.
Global equities were up +6.8% in November. The positive performance came on the back of inflation trending lower and markets viewing this as a sign the Federal Reserve (US Central Bank) may be scaling back its interest rate hikes. The Consumer Price Index (CPI) numbers came in lower than expected on 9th November which saw the Nasdaq rally more than 7% in one day, its highest daily jump since March 2020.
S&P +5.38%. A combination of investors believing bad news may already be priced-in, favorable earnings reports, as well as indications that the Federal Reserve is open to slowing its pace of rate hikes may have helped fuel the rally. Investors should be aware of supply chain disruption concerns mounting amid protests in China over lockdown disruptions.
Europe +6.74%. Although last month has been positive for Europe, there are still concerns over business activity slowing, adding to signs that the economy may be in a recession. Germany reported better than expected economic growth in the third quarter amid waning fears of energy shortages in the winter. UK’s FTSE 100 grew more than 1% this month, a potential sign investors are encouraged by the new shake up and new ‘mini budget’ laid out by the new Chancellor of Exchequer, Jeremy Hunt.
Asia +14.84%. Asia saw encouraging growth levels this month, up significantly from the previous month. Wall Street banks have newfound optimism around Xi Jinping’s policy pivots rand other major banks moving away from their bearish views, including news that Morgan Stanley expecting MSCI China Index to rally 14% by year end. This is despite mass protests surrounding governments tightening covid restrictions, as their cases soar.
Emerging Markets +14.64%. Stocks rallied hard this month by the most since March 2016. As the fed cuts back on interest rates, it is a strong signal that investors may be spurred on to look at the opportunities beyond developing nations. Emerging markets were also supported by a 5% drop in the USD.
A clean sweep in all sectors showing positive numbers in November.
Materials were the biggest winners this month, gaining 13.91%. The growth has been buoyed by continuing demand and an increase in prices. As inflation wanes, it may continue to be supportive of business and individuals having higher disposable incomes to spend on housing and manufacturing sectors.
Information Technology continued climbing this month, despite large layoffs from tech behemoths including Meta and Microsoft. However, smaller than expected rate hikes have helped the Information Technology sector climb 6.05% this month.
Global bond prices up 2.55% with yields decreasing. A key driver behind the moves being softening interest rate expectations from the Federal Reserve.
Check out the rest of this month’s performance figures here:
Sources: Bloomberg & Saxo Group
Global equities are measured using the MSCI World Index. Equity regions are measured using the S&P 500 (US) and the MSCI indices Europe, AC Asia Pacific and EM respectively. Equity sectors are measured using the MSCI World/[Sector] indices, e.g., MSCI World/Energy. Bonds are measured using the USD hedged Bloomberg Aggregate Total Return indices for total, sovereign and corporate respectively. Global Commodities are measured using the Bloomberg Commodity Index. Oil is measured using the next consecutive month’s WTI Crude oil futures contract (Generic 1st 'CL' Future). Gold is measured using the Gold spot dollar price per Ounce. The US Dollar currency spot is measured using the Dollar Index Spot, measuring it against a weighted basket of the following currencies: EUR, JPY, GBP, CAD, SEK and CHF. Unless otherwise specified, figures are in local currencies.
Global equities are measured using the MSCI World Index. Equity regions are measured using the S&P 500 (US) and the MSCI indices Europe, AC Asia Pacific and EM respectively. Equity sectors are measured using the MSCI World/[Sector] indices, e.g., MSCI World/Energy. Bonds are measured using the USD hedged Bloomberg Aggregate Total Return indices for total, sovereign and corporate respectively. Global Commodities are measured using the Bloomberg Commodity Index. Oil is measured using the next consecutive month’s WTI Crude oil futures contract (Generic 1st 'CL' Future). Gold is measured using the Gold spot dollar price per Ounce. The US Dollar currency spot is measured using the Dollar Index Spot, measuring it against a weighted basket of the following currencies: EUR, JPY, GBP, CAD, SEK and CHF. Unless otherwise specified, figures are in local currencies.
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