November was a dynamic month for global and local markets, with key movements across equities, bonds, currencies, and commodities. The November Market Update 2024 from the Matrix team explores these shifts in detail, providing valuable insights into what drove performance during the month.
This report covers equity market trends, bond yields, and the Australian dollar’s performance, offering a comprehensive view of November’s market activity. Read on to understand how these developments may set the tone for early 2025.
How the Different Asset Classes Have Fared
As of 30 November 2024
November Market Update 2024: Key Performance Highlights
Equities on the Rise
Both Australian and international equities rose in November. US equities grew on expectations for policies under a Trump presidency that will benefit US companies, mainly US banks and US energy stocks. In Australia, technology stocks grew as investors sought investment opportunities that will be less affected by global market challenges.
Bond Prices Increase as Yields Decline
Australian and international bond prices rose as bond yields fell in expectation of continuing rate cuts in both Australia and the US. This was despite Trump’s planned policies that could have an inflationary effect on the US economy.
AUD Weakens Against USD
The Australian dollar depreciated against the USD as the USD strengthened after the result of the US election. The president-elect’s proposed policies, such as increased tariffs, could increase inflation and slow interest rate cuts, which would increase demand for the USD.
Commodities Fall as Global Demand Weakens
Oil prices fell in November due to global demand stagnation, and gold also fell as the strengthening USD lowered the need to use gold as a hedge against currency devaluation.
International Equities
In November hedged international shares and unhedged international shares were the fastest growing asset classes, growing by 4.99% and 5.20% respectively. Unhedged international shares outperformed hedged due to strong growth in the value of the US Dollar (USD) relative to the Australian Dollar (AUD) following on the from the result of the US election.
With Donald Trump’s victory in the US election investors were drawn to US stocks under the belief that Trump’s policies will be beneficial for US companies, with a particular focus on banks, technology stocks, and US based manufacturing companies. The strongest sector was consumer discretionary which grew by 7.62%, largely due to Tesla benefitting from Elon Musk’s close relationship with the president-elect. The financials sector was the next best sector, growing by 7.46% with investors expecting a Trump presidency to mean looser banking regulation such as lower bank capital requirements that would improve profitability for US banks. Then we had the energy sector returning 4.95% and technology returning 4.59%, American oil companies benefitted from the belief that Trump policies would be a boon to them while technology stocks continued to grow as they have since the start of the year, with a bit of a boost from crypto related stocks such as Coinbase which have benefitted from Trump’s position on crypto currencies.
The only two sectors to fall in November were healthcare and materials, falling by 1.57% and 1.10% respectively. Healthcare stocks suffered as investors worry about what a Trump presidency will mean for health insurance subsidies. Materials has been a weak sector for much of this year and has continued to underperform due to fluctuations in material prices.
Australian Equities
Australian equities grew in November by 3.66%, reaching record highs. Leading that growth was the technology sector (10.87%) followed by the utilities sector (9.19%), and the consumer discretionary sector (7.53%). Technology stocks had a strong month as investors sought to find investment opportunities that are less effected by global market challenges. Utilities also grew from investors seeking more defensive stocks considering potential disruption in the market from Trump’s victory in the US. Consumer discretionary stocks have risen after retail sales beat expectations by rising by 0.6% in October and consumer confidence increased.
In November just two sectors retreated, materials by 2.91% and energy by 1.72%. Just as in the US the materials sector suffered due to fluctuating material prices that caused investors to step away from the sector. The energy sector fell in Australia due to falling oil and coal prices from lower expected global demand.
Domestic and International Fixed Income
Australian bonds returned 1.11% in November as both the two-year and 10-year bond yields fell. The two-year bond yield fell by 12 basis points from 4.10% to 3.98% while the 10-year bond yield fell by 18 basis points from 4.37% to 4.19%. Yields fell following the announcement that the monthly Consumer Price Index (CPI) rose by 2.1% in October, the lowest inflation since July 2021. The trimmed mean inflation on the other hand, which the Reserve Bank of Australia focuses on for their interest rate decisions was 3.5% in October, up from 3.2% in September, showing that inflation is remaining somewhat sticky in the Australian economy.
International bonds also rose in November, returning 1.27% as bond yields fell. The US two-year bond yield fell by 3 basis points from 4.20% to 4.17% and the US 10-year bond yield fell by 20 basis points from 4.56% to 4.36%. This reduction in yields stems from the market continuing to expect sharp rate cuts from the Federal Reserve despite the fact that Donald Trump is expected to implement more inflationary policies.
Australian Dollar
In November the Australian Dollar depreciated against the US Dollar by 0.76%. This depreciation occurred more so due to the strength of the USD rather than weakness in the AUD. The USD has seen very strong performance since the result of the US election was decided, Trump’s economic policies are seen as inflationary which will slow down interest rate cuts from the Federal Reserve which in turn increases demand for the USD. On the side of the Australian Dollar though it was also continuing disappointment in China’s stimulus announcements that lowered expected demand for Australian exports and the Australian Dollar.
Commodities – Gold and Oil
The price of oil fell by 1.15% in November, continuing its trend from the past six months as the growth outlook in China continues to disappoint and general demand for oil across the globe has stagnated. This fall has been despite the intensifying conflict in Ukraine and the continuing conflict in the Middle East.
Gold fell in November as well, retreating by 4.14%. This retraction can be attributed to the growing strength of the US Dollar as the two share an inverse relationship, when the USD is strong there is less need to use gold as a hedge against currency devaluation.
November’s market movements have set the stage for a dynamic start to 2025. From rising equities to bond market activity and the Australian dollar’s performance, investors have much to consider as we head into the new year.
Looking for December insights?
Through our collaboration with Quilla, Middleton Financial Planning brings you valuable insights into market themes like rising government debt and US small-cap equity opportunities.
Want to learn more about Quilla’s role in more innovative investment solutions? Read our blog post: New Investment Strategies: Is Quilla Right for Your Portfolio?
Contact our team today for personalised insights or to discuss how these developments may impact your investments. We’re here to help.
Disclaimer
The information provided in this communication has been issued by Centrepoint Alliance Ltd and Ventura Investment Management Limited (AFSL 253045).
The information provided is general advice only and has not taken into account your financial circumstances, needs or objectives. This publication should be viewed as an additional resource, not as your sole source of information. Where you are considering the acquisition, or possible acquisition, of a particular financial product, you should obtain a Product Disclosure for the relevant product before you make any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. It is imperative that you seek advice from a registered professional financial adviser before making any investment decisions.
Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Centrepoint Alliance Ltd nor its related entities, guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution.
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