November was a pivotal month for global markets, shaped by the U.S. presidential election and its far-reaching effects. While U.S. equities surged on the back of pro-business optimism, non-US and the NZ markets faced a mix of challenges and opportunities, with varied performance across regions.
Global Markets
November kicked off with the highly anticipated U.S. presidential election, resulting in a "Red Sweep" as President-elect Donald Trump and the Republican Party secured control of the presidency and both houses of Congress. This outcome fuelled a rally in U.S. markets, driven by expectations of pro-business initiatives such as corporate tax cuts and deregulation. The optimism drove major US indices to new highs, with the S&P 500 and Dow Jones Industrial Average posting their strongest monthly gains of 2024, rising 5.7% and 7.5% respectively. U.S. small-cap stocks also surged, with the Russell 2000 Index gaining 10.8% for the month.
While U.S. markets thrived on the back of post-election optimism, the picture for global markets was much less upbeat. Emerging markets struggled amid concerns of President-elect Trump’s proposed tariffs, including a 60% levy on Chinese goods, which added to ongoing concerns about slowing growth. In Europe, the STOXX Europe 600 Index managed a modest 1.0% gain, despite headwinds from political instability in France and uncertainty surrounding potential U.S. tariffs on European exports. Even with these global challenges, the MSCI All Countries World Index (ACWI) posted a 4.1% gain (NZD-hedged), buoyed largely by the strength of U.S. equities.
U.S. yields had been rising in the lead-up to the U.S. election, as investors priced in the potential inflationary effects of a Trump administration. However, the appointment of Wall Street veteran Scott Bessent as Treasury Secretary calmed concerns over fiscal responsibility. As a result, the U.S. 10-year yield, which started the month at 4.29%, eased to 4.18% by month-end. The Bloomberg Global Aggregate index gained 1.2% (NZD-hedged).
New Zealand Markets
On the domestic front, economic data painted a mixed picture. Unemployment rose slightly in the September quarter, climbing from 4.6% to 4.8%, reflecting ongoing challenges for the labour market. In response, the Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) by 50 basis points to 4.25%, marking the third rate cut in four months as it prioritised stimulating economic activity as inflation eases.
Despite soft economic data, consumer confidence increased to 99.8, its highest level in over three years, while business confidence showed resilience, signalling optimism for the future. This positive shift in sentiment, combined with the benefits of monetary easing, helped the NZX50 deliver a strong 3.4% gain for November.
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This information is provided in a general nature only and should not be construed as or relied on as financial advice. This is not a recommendation to invest in a particular financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any investment decisions.
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