November market performance: Equities take flight in hope of soft landing November market performance: Equities take flight in hope of soft landing November market performance: Equities take flight in hope of soft landing

November market performance: Equities take flight in hope of soft landing

Market Rewind
Søren Otto Simonsen

Senior Investment Editor

Summary:  November performance was positive almost across the board. Armed with a belief that rates are about to fall, lower inflation and strong earnings, markets saw the glass as half full in the second to last month of 2023. Still, risks are on the horizon and especially the continued success of US tech stocks has analysts scratching their heads as they now make up a historic proportion of the leading indices.


November turned out to be a good month for equities. The global index we track increased over 9 pct. The positive performance came on the back of the expectation that we are closing in on so-called peak rates, i.e. that central banks are about to stop hiking interest rates, and maybe even start lowering them, due to easing inflation. This seems to drive a belief that we are in for a soft landing, which is a smart word for saying that markets hope to avoid a deep recession. An increasingly high concentration of large stocks in the US leading indices have also added to the results but is generally a risk going forward.

US 8.9%

The US leads the pack, posting returns of almost 9 percent. As mentioned above, a soft landing, coupled with the expectation of a more business-friendly interest rate environment, is one component of this performance. Another is good earnings from some of the region’s largest (tech) stocks like NVIDIA . While this is generally positive, it comes with the added risk that such companies have increased so much in value that they make up a larger part of the leading US indices than we’ve experienced before. This leads to the risk that index performance grows ever more reliant on single stocks’ performance, which is somewhat contradictory to the nature and purpose of such indices.

Europe 6.3%

Europe posted returns well above 6 percent. The story is quite similar to the one in US – an expectation of fewer rate hikes and more rate cuts on the back of falling inflation has sent good vibes in to the markets and sent equities up.

Asia 7.7%, Emerging Markets 7.9%

Asia and Emerging Markets performance has been driven mainly by India, while Chinese equities also posted positive returns, although at a slightly lower level.

On the sector side, Information technology was the big winner, returning 13.6% for November, mainly based on the strong earnings within the sector. Consumer discretionary and Financials also did well as a result of the improving financial conditions and (expectations of) lower interest rates.

Also bond markets posted positive numbers. In fact, they posted something that could be viewed as close to record returns. Global sovereign bonds rose in the month of November, the most since May 1995, when then Chairman of the US Federal Reserve Alan Greenspan prepared to deliver a first "insurance cut" to combat an economic downturn. Such action, set up the grounds for a bull market.

In a sympathy move with sovereign bonds, global corporate investment grade bond rose 4.67%, the most since April 2020, and the second highest on record (since 2000).

The reasons are expectations of a soft landing, driven by speculations that the Federal Reserve will begin cut rates in 2024, before hitting their inflation target. (Bond section is written with input by Althea Spinozzi)

Check out the rest of this month’s performance figures here:

Sources: Bloomberg and Saxo

Global equities are measured using the MSCI World Index. Equity regions are measured using the S&P 500 (US) and the MSCI indices Europe, AC Asia Pacific, and EM respectively. Equity sectors are measured using the MSCI World/Sector] indices, e.g., MSCI World/Energy. Bonds are measured using the USD hedged Bloomberg Aggregate Total Return indices for total, sovereign, and corporate respectively. Global Commodities are measured using the Bloomberg Commodity Index. Oil is measured using the next consecutive month’s WTI Crude oil futures contract (Generic 1st CL Future). Gold is measured using the gold spot dollar price per ounce. The US Dollar currency spot is measured using the Dollar Index Spot, measuring it against a weighted basket of the following currencies: EUR, JPY, GBP, CAD, SEK, and CHF. Unless otherwise specified, figures are in local currencies.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992