Developed market (DM) equities returned to their winning ways in November (MSCI World Index +4.6% MoM), bouncing back from an October wobble. November global equity market returns were overwhelmingly driven by US markets (S&P 500 +5.9% MoM) as the outcome of the US election was perceived to be broadly positive for most US corporates. The most significant market moves in November could generally be tied to the result of the US election.
Amongst the S&P 500 sectors, financial companies (+10% MoM) were amongst the best performing, boosted by the prospect of lower regulations under President-elect Donald Trump’s administration. Energy companies (+7% MoM) rallied despite a lower oil price (Brent crude -0.3% MoM) on expectations of an easier regulatory environment for fossil fuel companies. Healthcare companies (+0.3% MoM) were the worst-performing S&P 500 sector, with Trump’s pick for secretary of the Health and Human Services Department, vaccine sceptic Robert F. Kennedy, anticipated to create a fairly hostile environment for pharma companies. COVID-19 vaccine producer Moderna (-21% MoM) was amongst the biggest losers on the US bourse in November. Tesla (+38% MoM) rallied 15% on the day that Trump was confirmed as the next US president, with Tesla CEO Elon Musk, one of the biggest supporters of a Trump presidency, rewarded with the announcement that he would be co-head of the new Department of Government Efficiency in Trump’s presidency.
Emerging market (EM) equities (MSCI EM -3.6% MoM) fell for a second consecutive month, weighed down by the prospect of increased tariffs for EM exports headed to the US. A strong US dollar also weighed on EMs and commodity prices. The US dollar rallied for a second consecutive month (US Dollar Index +1.7% MoM) as the greenback strengthened against all major currency pairs (except the Japanese yen).
Global rates, which had risen sharply in October as investors weighed the likelihood of more inflationary policies from the incoming US government, continued to rise at the beginning of November, with the US government’s 10-year borrowing rate edging towards 4.5% p.a. before Trump’s announcement that Scott Bessent would take over as the next Treasury secretary. The prospect of a “safe pair of hands” at the helm of the US Treasury helped push US government borrowing rates lower into month end, with the US 10-year borrowing rate ending November at 4.2% p.a.
