November was a strong month for global risk assets, with US equity markets back to leading the way (S&P 500 +3.6% MoM). Much of the rally was driven by hopes of some progress in the US/China trade war negotiations. Investors were encouraged by news that China was tightening rules protecting intellectual property rights and that a trade deal was close. Late in the month, US President Donald Trump signed a bill into law which pledged US support for protesters in Hong Kong, evoking ire from China, although this wasn’t enough to derail markets. Ongoing protests in Hong Kong continued to weigh on Chinese stocks, which helped drag emerging markets (EMs) into negative territory (-0.1% MoM) and back to lagging developed markets (DMs; +2.8% MoM), which are now 14% ahead YTD.
S&P 500 stocks wrapped up their 3Q19 earnings reporting season during the month, with the 30% of stocks reporting in November maintaining the trend of flat earnings growth for the quarter – slightly ahead of expectations, as negative earnings growth from energy and material shares weighed on averages. US healthcare and financial stocks were again amongst the winners for the month, clawing back some of their recent underperformance. US healthcare counters have now had two consecutive months of more than 5% performance but are still the second worst-performing S&P 500 sector in 2019 (+16% YTD), with only energy stocks (+5% YTD) having had a worse year so far.
US bond yields climbed as risk appetite returned and US 10-year government bond yields approached 2% before retreating to end the month at 1.8%. That was enough to drive a rally in the US dollar against most currency pairs, with the South American currencies fairing the worst as the Brazilian real fell 5% after a disappointing oil auction scuppered hopes of foreign flows and the Chilean peso dropped 7% as violent protests continued to weigh on productivity and tourism in that country.