Overview

Following a strong run since the Liberation Day event in April, stock markets paused for breath in November as worries about AI valuations and the impact of the longest US government shutdown in history started to weigh on risk appetite.

US stock markets were mixed as defensives took over from technology and cyclicals, Japan rallied and European stocks were positive while emerging markets and Asia ex-Japan posted losses of more than 2% for the month as tech-heavy markets like South Korea and Taiwan – among some of the year’s best performing stock markets – suffered some give-back.

Although the US government shutdown ended, a positive catalyst for market liquidity, AI valuation concerns hit some of the market leaders the hardest, weighing on the overall performance of equity indices.

Expectations the Federal Reserve will cut interest rates in December helped to lift the mood, with a mix of official and private employment data painting a picture of emerging weakness in the labour market.

US

The S&P 500 eked out a modest gain to extend its run to 7 consecutive months of progress since the Liberation Day volatility event in April. The conclusion of third-quarter earnings season saw the S&P 500 post 13% YoY earning growth, 6% margin expansion and 7% revenue growth.

Despite the positive earnings profile for the broad market and very strong earnings from Nvidia,worries about AI valuations started to eat away at confidence and already high expectations for the sector.

The 0.2% gain forthe S&P 500 was below the historical average – the broad market has advanced an average of 1.8% in November since 1950, according to the Stock Trader’s Almanac. 

UK

The FTSE 100 broke a four-month winning streak in November, but the broader and more diversified UK FTSE All-Share rose 0.4% for the month. Down around 3% at one point during the month, the UK’s blue chips finished just 0.2% lower for the month after a decent pick-up after the Budget.

Notable concentration in financial and defence stocks has underpinned the FTSE 100’s recent strength – the defence half of these two props for the blue chips hit turbulence in November. Concerns about the later-than-usual Budget on 26 November acted as a headwind with UK equity outflows steady during the month until the day of the event.

Client Trends

UK clients were active in megacap US tech and AI names as they have been throughout the year.

What really stood out in November was the strong buying behind Crypto and Quantum Computing names. D-Wave, Rigetti and Quantum Computing were among the stocks with the strongest buy % among clients, whilst BitMine, Strategy and Coinbase were also among the top 20 most popular stocks.

The strong showing for the iShares Bitcoin ETN will reflect the fact it has only recently been made available to retail investors in the UK, however the fact that Bitcoin entered a bear market last month amid heavy selling will have attracted interest.

Exchange traded products (ETFs, ETNs and ETCs) remained popular instruments among clients seeking diversification benefits amid the market turbulence with 6 (including 4 equity ETFs) among the top 20 most popular. I looked at the reasons for this a couple of months ago.

Most Traded Stocks & ETFs at Saxo

Most Popular – stocks and ETFs with strongest % buy ratio in October (minimum # of trades required)