November market performance: Equities take flight in hope of soft landing

US 8.9%

The US leads the pack, posting returns of almost 9 percent. As mentioned above, a soft landing, coupled with the expectation of a more business-friendly interest rate environment, is one component of this performance. Another is good earnings from some of the region’s largest (tech) stocks like NVIDIA . While this is generally positive, it comes with the added risk that such companies have increased so much in value that they make up a larger part of the leading US indices than we’ve experienced before. This leads to the risk that index performance grows ever more reliant on single stocks’ performance, which is somewhat contradictory to the nature and purpose of such indices.

Europe 6.3%

Europe posted returns well above 6 percent. The story is quite similar to the one in US – an expectation of fewer rate hikes and more rate cuts on the back of falling inflation has sent good vibes in to the markets and sent equities up.

Asia 7.7%, Emerging Markets 7.9%

Asia and Emerging Markets performance has been driven mainly by India, while Chinese equities also posted positive returns, although at a slightly lower level.

On the sector side, Information technology was the big winner, returning 13.6% for November, mainly based on the strong earnings within the sector. Consumer discretionary and Financials also did well as a result of the improving financial conditions and (expectations of) lower interest rates.

Also bond markets posted positive numbers. In fact, they posted something that could be viewed as close to record returns. Global sovereign bonds rose in the month of November, the most since May 1995, when then Chairman of the US Federal Reserve Alan Greenspan prepared to deliver a first "insurance cut" to combat an economic downturn. Such action, set up the grounds for a bull market.

In a sympathy move with sovereign bonds, global corporate investment grade bond rose 4.67%, the most since April 2020, and the second highest on record (since 2000).

The reasons are expectations of a soft landing, driven by speculations that the Federal Reserve will begin cut rates in 2024, before hitting their inflation target. (Bond section is written with input by Althea Spinozzi)