November 2024 Update

Making The News

1.The Trump Trade Off

The November US Presidential election saw the emergence of a limitless trump victory, as trump claimed the majority, the Senate and the House of Representatives. US equities rallied in anticipation of Trumps touted tax cuts. The rally in the US was underlined by the three major indices in the US surging to record highs, with the Dow Jones (+19.2% YTD), S&P 500 (26.5% YTD) and the Nasdaq (+28.0% YTD) returning +7.5%, +5.7% and +6.2% respectively during the month. Additionally, the dollar strengthened under increasing interest rate expectations in anticipation that the new Trump administration will be inflationary. As expected, the US October inflation printed higher with the Consumer Price index increasing to 2.6% YoY from 2.4% in September.

Trump has also proposed 25% sweeping tariffs on Mexican and Canadian goods as a response to border violations, and a 10% increase on Chinese goods tariffs  to Curb the inflow of illegal goods. The Peso, Cad and Yuan all fell in response to the announcement.

2. Commodities

Oil prices retreated (-0.3%) at the end of November as Israel and Hezbollah brokered a ceasefire agreement, reducing concerns of supply risks within the Middle East and pushing the YTD return for Brent Crude to -5.3%. Gold prices also fell (-3.7%) driven by a Trump based sell off, putting an end to the four-month rally,.

3. China vs Trump

Investment sentiment surrounding China was subdued following Trumps election victory, as markets reacted to the increasing likelihood of heightened trade tariffs on Chinese exports. Despite the negative sentiment,  equity markets were mixed at the end of the month, as investors priced in the potential of more forceful stimulus measures being announced at the Central Economic Work Conference in December. Additionally, the manufacturing PMI continued the positive momentum and increased from 50.1 in October to 50.3 due to increased factory activity following Septembers stimulus package. In line with the increasing PMI, Chinese EV frontrunner BYD achieved an all-time high of c. 506,000 vehicles deliveries in November, and has already exceeded their annual sales target of 3.6 million with a month to spare. The mixed month ended with the Shanghai Composite rising +1.4% (+11.8% YTD) and the Hang Seng closing -4.4% lower (+13.9% YTD).

4. GNU – too good to be true?

The JSE was down for the second consecutive month with the FTSE JSE All share falling by -1.0% MoM (+9.9% YTD) and the Capped Swix down -0.9% MoM. Mining shares fell in step with retreating commodity prices (particularly gold and PGM’s), reflected by the Resi-10 falling by -6.7% MoM (-4.1% YTD). On a positive note, SA property continues to provide the best performance within South Africa and returned +1.1% during the month(+21.5% YTD). From an economic perspective, SA October headline inflation declined to 2.8%,  which is below the SARBs target range of 3-6%. Against this backdrop the SARB’s Monetary Policy committee decided to lower the repo rate by a further 0.25% to 7.75% p.a. at it’s November meeting.