Sabco® Investment's Monthly Market Report - November, 2024

Sabco® Investment's Monthly Market Report - November, 2024

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November 2024 witnessed a robust rally in global financial markets, propelled by the U.S. presidential election outcome, investor optimism regarding pro-business policies, and expectations of continued monetary easing. Despite underlying concerns about inflation and geopolitical tensions, risk assets experienced significant gains, particularly in the United States.​

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U.S. equities surged, with the S&P 500 climbing 5.7% and the Dow Jones Industrial Average advancing 7.5%, marking their strongest monthly performances of the year. The Russell 2000 Index, representing small-cap stocks, outperformed with an 11% gain, reflecting investor enthusiasm for domestic-focused companies anticipated to benefit from the incoming administration's policies . All 11 sectors of the S&P 500 posted gains, led by consumer discretionary and financials.​

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The Federal Reserve implemented a 25 basis point rate cut, lowering the federal funds rate to a range of 4.50%-4.75%, citing progress in curbing inflation and a stabilizing labor market . This move contributed to a decline in Treasury yields, with the 10-year yield ending the month at 4.13% after peaking at 4.37% mid-month.​

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Fixed income markets responded positively, with the Bloomberg U.S. Aggregate Bond Index gaining 1.1%. High-yield bonds performed notably well, as spreads tightened to historically low levels, and the Bloomberg U.S. High Yield Corporate Index returned 2.6%.​

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International equities lagged behind U.S. markets. The MSCI EAFE Index, representing developed markets outside the U.S. and Canada, declined by 0.6%, while the MSCI Emerging Markets Index fell by 3.6%, impacted by a strengthening U.S. dollar and concerns over potential protectionist U.S. trade policies.​

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In the United Kingdom, the economy returned to growth with a 0.1% GDP increase in November, driven primarily by the services sector. This modest expansion eased some pressure on policymakers, although it was below the 0.2% growth forecasted by economists.​

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The eurozone faced challenges, with political instability in France and Germany contributing to a weaker euro. Disappointing economic data led markets to anticipate additional rate cuts by the European Central Bank in 2025.​

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Commodities experienced mixed performance. The Bloomberg Commodity Index posted a modest gain of 0.4%, with energy prices rising due to supply concerns, while gold prices retreated by 3.4% amid a stronger U.S. dollar and reduced geopolitical uncertainties.​

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Currency markets saw the U.S. dollar strengthen against major currencies, bolstered by rising Treasury yields and expectations of pro-growth domestic policies. The euro and British pound depreciated, while the Japanese yen initially weakened but later recovered as U.S. rates eased.​

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Investor sentiment was buoyed by the anticipation of business-friendly policies under the new U.S. administration. Trading activity surged, with U.S. stock trading volumes increasing by 38% compared to November 2023, benefiting brokerage firms and financial institutions.​

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However, risks remained, including potential trade tensions stemming from proposed tariffs on imports from China, Mexico, and Canada. These measures raised concerns about global economic growth and supply chain disruptions.​

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In summary, November 2024 was characterized by strong performance in U.S. equities and fixed income markets, driven by political developments and monetary policy actions. While international markets faced headwinds, investor optimism prevailed, setting the stage for continued market momentum into the end of the year.​