SPW MarketWatch: November 2024
- 12 December 2024
- 5 mins reading time
FactSet, 7 December 2024. Figures are monthly price returns in local currencies for November2024.
US shares outperformed in November following Donald’s Trump’s victory in the Presidential election, while emerging markets came under pressure amid worries over trade tariffs.
Global bond markets ended the month on a positive note, despite volatility earlier in the month surrounding the US elections. Bond yields fell (Prices rose) as central banks continued on their path of cutting interest rates.
UK
UK-focused stocks saw a rise in November(1), recovering some of the losses in the immediate wake of the October Budget. There was also a stabilisation in long-term government borrowing costs, which fell back marginally in November. These two factors added to the view there had been no major near-term surprise as a result of the overall policy thrust of the new Labour government.
The UK's services sector showed signs of cooling down. The S&P Global UK Services Index fell to 50.8 in November, the lowest since November 2023(2). Although still indicating growth, it's a sign of slowing activity, similar to the period of mild recession last year due to high interest rates.
The Bank of England reduced the Bank Rate by 0.25% in November(3). The unemployment rate edged up to 4.3% for the three months to September, from 4% in the previous quarter(4). However, wage growth remained strong at 4.8%(5) (excluding bonuses), outpacing inflation.
The stock market saw a surge in takeover deals, with four new announcements in the last week of November, marking a busy end to the month after a quieter summer(6).
Europe
Eurozone shares, were mostly flat in November. The information technology and communication services sectors saw gains, while materials and consumer staples experienced declines. Exporters faced challenges due to potential US tariffs and weak demand from China, but a stronger dollar may help.
Economic data indicated continued weakness in the eurozone.
Euro area annual inflation is expected to rise to 2.3% in November from 2.0% in October(7). Despite this increase, the European Central Bank (ECB) is may continue its monetary policy easing due to economic weakness. The ECB is expected to lower interest rates at its meeting on 12 December(8).
Germany's coalition government collapsed after Chancellor Scholz dismissed the finance minister, leading to new elections in February. In France, concerns over debt grew as borrowing costs rose, with worries about the government's ability to pass a cost-cutting budget(9).
US
US shares surged in November after Donald Trump won the Presidential election. Expectations of growth-boosting policies, lower taxes, and reduced regulation lifted equities. The Republican party's control of Congress could help implement their policy agenda.
The Federal Reserve cut interest rates by 0.25% to 4.50-4.75%. The Federal Reserve noted easing labour market conditions and still-elevated inflation(10).
October's nonfarm payrolls were affected by hurricanes and strikes, showing only 12,000 new jobs. Inflation rose to 2.6% in October from 2.4% in September.
Consumer discretionary and financials were top performers, with gains in carmakers, retailers, and banks. Healthcare and materials were the weakest sectors. Smaller companies also did well, expected to benefit from Trump's policies.
And Finally….
Overall commodities achieved a small gain in November. Agriculture and livestock were the best performing components of the index, while industrial metals and precious metals were weaker. In energy, the price of natural gas rose strongly in the month.
If you are not currently an SPW client and are concerned about the potential implications of possible tax changes, then you may want to speak with a financial adviser, who could help you understand and navigate any changes announced.
Sources:
(1) UK investors put record $3.9 bln in equity funds in November, survey says | Reuters
(2) https://www.pmi.spglobal.com/Public/Home/PressRelease/2aea697d534c479ebfb5610a5b82a727
(4) Unemployment rises as pay growth slows again - BBC News
(5) Labour market overview, UK - Office for National Statistics
(6) The UK takeover market has seen a surge of activity in the last few years | Shares Magazine
(7) Euro area annual inflation up to 2.3% - Eurostat
(8) ECB to cut rates by 25 bps on Dec. 12; at least four more likely in 2025 | Reuters
(9) German government collapses after Olaf Scholz sacks finance minister | Germany | The Guardian
(10) Federal Reserve Recalibrates Monetary Policy as Inflation Recedes | U.S. Bank
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