Monthly Comment - November 2024

In November 2024, global financial markets exhibited notable movements across

various asset classes, influenced by economic data releases, central bank

policies, and geopolitical developments. Below is a comprehensive analysis of

equities, bonds, currencies, interest rates, and commodities, focusing on the U.S.,

Europe, China, and Japan.

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Equities

Significant Market Moves

U.S. equities experienced substantial gains, with the S&P 500 and Dow Jones

Industrial Average reaching record highs. The Dow approached the 45,000-point

milestone, marking November as the best-performing month of the year. The rally

was driven by optimism surrounding President-elect Donald Trump's pro-business

policies, including corporate tax cuts and deregulation. The S&P 500 had a stellar

performance in November 2024, gaining over 5.7%, which marked the best

monthly performance of the year. The tech sector, especially companies like

NVIDIA and Apple, led the gains with strong AI and consumer electronics demand.

Tesla's stock also had a notable increase due to positive updates on production

efficiencies and new model announcements. The energy sector, however, was a

mixed bag with oil price volatility affecting companies like ExxonMobil.

In Europe, political instability, particularly in France, led to underperformance

in equity markets. Concerns over the potential collapse of the French government

due to budgetary disputes affected investor sentiment.

Chinese equities showed resilience despite global trade tensions, with the

MSCI Asia-Pacific index outside Japan rising by 0.4%, largely driven by a 2%

increase in Chinese blue-chip stocks.

Japanese equities faced pressure, with the Nikkei index falling by 0.3%,

marking its weakest performance since April. This decline was influenced by

expectations of an imminent interest rate hike by the Bank of Japan.

Notable Company News

Stellantis, a major player in the European automotive sector, saw its shares

drop by 8.6% following the resignation of CEO Carlos Tavares and plans to lay off

1,100 workers at its Toledo, Ohio Jeep factory.November 2024

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Bonds

Significant Market Moves

U.S. Treasury yields experienced slight decreases, with the 10-year Treasury

yield declining, reflecting investor caution amid economic data releases.

In Europe, French bond yields rose due to political instability and budgetary

concerns, leading to increased borrowing costs for the country.

Chinese 10-year government bond yields fell to record lows, influenced by

easing expectations from the People's Bank of China.

Japanese government bond yields remained stable, with market participants

anticipating potential rate hikes by the Bank of Japan.

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Currencies

Significant Market Moves

The U.S. dollar strengthened, supported by President-elect Trump's

endorsement of a stronger currency. The dollar index rose by 0.5%, while the euro

weakened amid European political uncertainties.

The Chinese yuan depreciated, hitting a three-month low, influenced by the

stronger dollar and domestic economic factors.

The Japanese yen appreciated against the dollar, with a weekly gain of 3%,

driven by expectations of a Bank of Japan rate hike.November 2024

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Interest Rates

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Central Bank Decisions and Economic Data

The Federal Reserve maintained its current interest rates, with markets

anticipating potential rate cuts depending on upcoming economic data.

The European Central Bank is expected to lower rates by at least 25 basis

points in December, aiming to support the economy amid rising inflation and

political uncertainties.

The Bank of Japan signaled potential interest rate hikes, influenced by firming

inflation and wage growth, with markets predicting a 60% chance of a rate

increase in December.

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Commodities

Gold prices fell by 0.6% to $2,663.30 per ounce, pressured by a stronger U.S.

dollar and rising Treasury yields. Despite the decline, gold has surged 28% in

2024, with potential to reach $3,000 in 2025.

U.S. crude oil prices rose, finding support from geopolitical tensions and strong

U.S. economic data. However, oil was set for weekly losses due to concerns over

weaker demand and increased non-OPEC supply.

Copper prices remained stable, with market participants closely monitoring

global economic indicators and trade developments, particularly between the U.S.

and China.

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Integrated Analysis

The interplay between these asset classes was evident in November. The

strengthening U.S. dollar exerted downward pressure on commodities like gold

and oil, as they are typically priced in dollars. Equity markets, particularly in the

U.S., benefited from positive investor sentiment driven by anticipated pro-business

policies, which also influenced bond yields and currency valuations. Conversely,

political instability in Europe led to increased bond yields and currency

depreciation, highlighting the interconnectedness of political events and financial

markets.

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Outlook for December 2024

Looking ahead, markets will focus on central bank decisions, particularly the

anticipated rate cuts by the ECB and potential hikes by the BOJ. U.S. labor market

data will be crucial in shaping Federal Reserve policy expectations. Geopolitical

developments, especially related to U.S. trade policies under the incoming

administration, will also play a significant role in influencing market dynamics

across asset classes.

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Equities: Expected to continue their upward trajectory, supported by expected

monetary easing, though potential corrections could occur if inflation data

unexpectedly rises.

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Bonds: Should maintain their attractiveness if the yield environment remains

favorable, providing safety amid equity market fluctuations.

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Currencies: The dollar might find some support if U.S. economic data shows

unexpected strength; otherwise, the trend of dollar depreciation could

continue, benefiting emerging market currencies.

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Commodities: Gold is likely to remain a strong performer with ongoing

geopolitical risks. Oil might see stable prices unless there's significant news on

supply or demand. Copper's price could see volatility based on Chinese

economic indicators but holds a strong long-term outlook.