Originally published at: https://blog.investengine.com/monthly-market-update-november-2024/
Welcome to the latest edition of our monthly market roundup
As Donald Trump claims his victory in the US Presidential race, the US election results were the primary driver of market performance in November. The prospect of further tax cuts, expansionary fiscal policy and the implementation of more protectionism trade policy boosted US equity markets. November also brought with it further interest rate cuts from the Federal Reserve and the Bank of England as the quest to bring inflation under control continues.
In the UK, annual CPI accelerated to 2.3%, an increase predominantly driven by higher household energy bills. The Bank of England has reduced its policy rate by another 0.25% to 4.75% after holding in September. Notably, following the UK budget, the Bank has lifted its inflation projections for 2025 and 2026.
Looking at markets, the FTSE 100 has gained 2.60%, finishing at 8287. This is followed by the UK FTSE All-Share gaining 2.50%.
In the US, Trump’s victory has investors focusing on tariffs and the prospect of friction with its trading partners. The Republican election win coupled with a moderately positive earnings season has translated to the S&P 500 gaining 5.87%, finishing at the all-time-high of 6032 and a significant outperformance versus other regions. Expectations for deregulation boosted US financials and energy sectors, while the industrial sector was seen as one of the main beneficiaries from tax cuts and trade policy.
The Federal Reserve has also cut rates further to 4.75%, a move supported by progress disinflation and recent employment data. There are concerns that Trump’s policy may reverse some of the inflation progress made thus far, this is something that fixed-income markets are paying close attention to.
Over in Europe, we pay close attention to France as the government is headed for collapse. Prime Minister Michel Barnier faces a vote of no-confidence after pushing an unpopular security budget bill through parliament without a vote; having been appointed by French president Emmanuel Macron in September.
Bond markets have reacted, with yields spiking and surging past Greek and Spanish levels of borrowing costs. Equity markets in the region presented moderate gains as the EuroStoxx 600 increased by 1.15% amid earnings warnings from the consumer goods and manufacturing sector.
Food and energy inflation were the main drivers in bringing Eurozone CPI back up to 2%.
Despite the resilience, weak demand in France and Germany is expected to give the European Central Bank enough justification for further cuts.
Fixed income markets were fairly muted for the month, with the largest contributor to returns being the currency exposure investors are subject to.
Currencies
In November, the US dollar rallied, as Trump’s fiscal plans were seen as inflationary, potentially cutting short the FED’s rate-cutting cycle and leading to one of the strongest monthly gains for the currency.
As a result, November saw the Great British Pound continue to decline, finishing at $1.2735 to the US dollar. Versus the Euro, we are looking at moderate gains as the GBP strengthens, finishing higher at €1.2038.
Commodities
Commodities had a volatile month in November, with strong gains in cocoa, coffee and natural gas being offset by weakness in precious and industrial metals.
Crude oil is broadly unchanged, finishing marginally lower at $68.00, whereas Gold continues to drift lower, finishing the month at $2,651 per ounce – a 3% decline.
Off the beaten track
In this month’s stranger stories, Elon Musk’s pay package was rejected by a judge, the popular 7/11 convenience store is considering going private in Japan’s largest buyout, and Black Friday deals seem to be getting more annoying by the year.
A Delaware judge has rejected the request to reinstate Elon Musk’s $56 billion Tesla compensation package, originally struck down in June. The package, which was tied to Tesla’s performance goals, faced criticism for being excessive and lacking proper oversight during approval. Musk criticised the judge and suggested companies reincorporate in Texas.
A bidding war surrounds Seven & i Holdings, owner of 7-Eleven, involving its management, founding family, and Canadian firm Alimentation Couche-Tard. Offers range up to $58 billion, with implications of taking the company private. Proposals aim to maximize shareholder value amid plans for restructuring and global growth.
Black Friday, traditionally marking post-Thanksgiving sales, has been expanding weeks earlier as retailers compete for sales, creating an exhausting and fragmented shopping season. This “unravelling” mirrors dynamics in matching markets, where early actions disrupt collective interests. Unlike clerkship markets with regulated timelines, retailers lack solutions, risking even earlier sales in the future.
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