A November to remember. The markets were all over the place to end the month. While the FOMC is still the focal point, repositioning after some big moves on the month and positioning into year-end were the main drivers. The FOMC has reached peak rates, according to Fed funds futures, and rate cuts are the next action, now fully priced for May.
Economic Indicators & Central Banks:
- PCE: Data has been mixed but generally reflect progress on the FOMC’s inflation goal and has convinced markets that rate cuts are underway — core PCE fell to 3.5% y/y from 3.7% y/y previously, but is still well above the 2% target. US pending home sales declined.
- OPEC+ announced an additional 1 mln barrels in cuts. The cuts will be announced individually by members, according to delegates. The Saudi Arabia is expected to extend its down voluntary cut of 1 million barrels.
Market Trends:
- Best month in 40 years! Treasuries rallied on FOMC expectations. But profit taking ahead of comments from Chair Powell today unwound some of the froth. The curve steepened to -36 bps versus -50 bps Monday.
- Stocks: Wall Street befittingly finished mixed. The US30 rallied 8.9% with the US100 up 10.7%. For the month the US30 was up 8.8%, its second best November since 1980, according to Bloomberg.
- For the S&P, 10 of the 11 sectors are higher on the month.
- Asia Stock markets were under pressure overnight, with the Hang Seng underperforming, despite a better than expected China Caixin manufacturing PMI that managed to lift above the 50 point no change mark again.
Financial Markets Performance:
- The USDIndex finished at 103.40 recovering from the slide to the 102.36 the prior two days after weaker than expected European and Chinese data.
- EURUSD broke below 1.09, indicating a possible reversal of the 2-month rally, however 1.0830-1.0860 remains the key support area.
- USDJPY rebounds to 148.30, USDCAD dips further into 1-year triangle with immediate support at 1.35, while GBPUSD settles above 1.26 despite US Dollar appreciation.
- Gold slipped about -0.4% to the $2036 area on the rise in yields and some fading of haven trades.
- USOIL slumped 2.9% to $75.59 after spiking 2.2% to $79.60 after OPEC+ announced a further production cut.
- Key Mover: EURCHF down by 1.26%. Next Support levels: 0.95, 0.9440 and 0.9375.
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Andria Pichidi
Market Analyst
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November has been an eventful month for the global stock market, with record-breaking highs and unexpected twists and turns. From the US presidential election to the progress of COVID-19 vaccines, there were plenty of factors that affected the market in the past month. Here’s a comprehensive recap of November’s market movements, and why it was a month to remember for investors.
The Stock Market Performance in November:
The month of November started off on a positive note for the stock market, with all three major US indices – S&P 500, Dow Jones Industrial Average, and Nasdaq Composite – hitting record highs. This was driven by the optimism surrounding the US presidential election, with many investors anticipating a Democratic win and a potential stimulus package.
However, the market took a nosedive as election day approached and uncertainties surrounding the outcome and potential delay mounted. On November 4th, the day following the election, the S&P 500 experienced the biggest post-election drop since 2008, with a 2.2% fall. The market continued to fluctuate as the votes were counted and legal challenges emerged.
On November 7th, it was finally announced that Joe Biden won the election, and markets responded positively. The S&P 500 and Dow Jones hit new record highs, with investors relieved that the long-awaited uncertainty was over. The stock market continued to climb throughout the month, with the S&P 500 finishing the month up by 10.8%, the Dow Jones up by 11.8%, and the Nasdaq up by 11.9%.
Factors That Drove the Market in November:
1. Election uncertainty:
The most significant factor that affected the market in November was the US presidential election. The market sees a potential Biden win as favorable, as it may lead to a more stable and predictable political landscape. Also, investors are banking on a potential stimulus package under a new administration, which could further boost the economy and the stock market.
2. COVID-19 vaccine progress:
Another crucial factor that impacted the market is the progress of COVID-19 vaccines. In November, Pfizer and Moderna announced that their vaccines were over 90% effective, bringing hope for a return to normalcy. This news gave the market a major boost, as lockdowns and restrictions have been a significant hindrance to economic growth and stock market performance.
3. Earnings reports:
Third-quarter earnings reports from top companies such as Amazon, Apple, and Google also contributed to the market’s performance in November. Most companies posted better-than-expected earnings, which showed that the economy was recovering from the effects of the pandemic.
Why November Was a Month to Remember:
1. Record-breaking highs:
Despite the initial market drop surrounding the election, November ended up being a month of record highs for the stock market. The S&P 500 recorded its best monthly performance since April, while the Dow Jones and Nasdaq recorded their best November performances since 1928. This surge in the stock market was remarkable, given the uncertainties and challenges the market faced throughout the month.
2. Broad market rally:
Another reason why November was a month to remember was the broad rally in the market. Typically, a few top-performing stocks drive the market, but in November, it was a broad rally where almost all sectors and industries saw positive gains. This shows that the market is recovering as a whole, rather than just specific companies or industries.
4. Continued optimism for the future:
With the election results and the progress of COVID-19 vaccines, investors are feeling optimistic about the future. This optimism has been reflected in the market’s performance and shows that confidence is returning, even amidst uncertain times.
Practical Tips for Investors:
With the market reaching record highs, it’s essential for investors to stay level-headed and not let emotions cloud their investment decisions. Here are some practical tips for investors during these historic times:
1. Diversify your portfolio:
As with any market, it’s crucial to have a diversified portfolio to mitigate risk. Don’t put all your eggs in one basket, and spread your investments across different industries and assets.
2. Stay informed:
Stay up-to-date with market news and trends, as they can help you make informed investment decisions. Keep an eye on political and economic developments, as they can have a significant impact on the market.
3. Consider long-term investments:
While short-term gains may be tempting, it’s essential to think long-term when it comes to investing. Look for solid, reputable companies with good track records, and focus on the overall growth potential rather than short-term fluctuations.
Conclusion:
November was indeed a month to remember for the stock market. The multiple record-breaking highs, the US presidential election, and the progress of COVID-19 vaccines made it an eventful and unpredictable month for investors. With the market on the rise, it’s essential to stay informed and make smart, long-term investment decisions. While uncertainties may persist, there is still reason for optimism and confidence in the market’s recovery.
