GoalsGetter Monthly Commentary November

November was a positive month for both equities and bonds, particularly after the conclusive outcome from the US election where the Republicans took the White House, the Senate and the House of Representatives. Overall global equities posted a strong month with the MSCI ACWI (NZD Hedged) up 4.1%.  The NZ Dollar remained below U$0.60 and weakened slightly meaning the MSCI ACWI Index (NZD unhedged) was up 4.4%. The Bloomberg Global Agg Index (NZD Hedged) advanced 1.2% for November, while the NZ Composite Bond Index was positive, but didn’t quite match global bonds, up +0.6. The New Zealand and Australian equity markets fared much better than other non-US regions, both posting gains of 3.4%.
Investor sentiment improved again following some equity market weakness in October, partially due to the expectations of market friendly regulation and policies next year from the new US government. US economic data continued to hold up well, and the Federal Reserve’s 25 bps rate cut in the month provided further tailwinds to the market. Outside of the US there was a more muted response for markets following the US election. A combination of weak economic data, and uncertainty over what new US global trade policy might involve, saw equity weakness in Europe and Asia. This weakness was more than offset by the rally in US equities with the S&P500 index up 5.7%, and the tech-heavy NASDAQ Index up 5.2%.
The more cyclically sensitive sectors led the way over November, with Consumer Staples (+7.3%) and Financials (+6.3%) posting strong returns. Materials had another weak month, down -1.1%, and year-to-date it is the only sector not in positive territory, down 2.2%. Global equities are up over 20% year-to-date in 2024 (in NZD Hedged terms) with Information Technology and Financials both up over 25%. Global equities posted similar sized gains last year.  Two years of back-to-back returns of 20%+ has been a rare occurrence over the last few decades, but providing there is no ‘Christmas surprise’ 2023/2024 could well achieve that feat!