Consistent with the theme throughout most of 2019, November saw equity markets continue to rally despite continued geopolitical uncertainty. With the ongoing US/Chinese trade dispute, Chinese officials confirmed in late November that both sides were close to reaching a consensus on resolving the outstanding issues. In the UK, the general election on 12 December continues to dominate headlines.
Major central banks (US, UK, Eurozone, Japan) were quiet over the month, in contrast to central bank easing dominating headlines throughout 2019, with only the Bank of England holding a meeting that confirmed no changes to its policy rate.
Optimistic investor sentiment was buoyed by broadly positive economic data that confirmed the US economy expanded by 2.1% (annualised) over the third quarter. US equities rose over the month of November, driven by a positive narrative around the finalising of a trade deal. In the UK, the market performed strongly with the sterling extending its recent recovery as GDP figures confirmed the UK economy had avoided entering a technical recession. Elsewhere in Europe, Christine Lagarde took over as president of the European Central Bank in early November. Eurozone equities responded positively to this news alongside improving economic data.
In Australia, the Reserve Bank of Australia (RBA) kept rates on hold at 0.75%. Weak sentiment saw consumers use the government tax refund to help pay down their debts according to the latest Commonwealth Bank quarterly update, with a similar tone reflected in disappointing retail sales volumes which fell 0.1% during the September quarter. Despite poorer consumer and business sentiment, property markets continue to strengthen following the series of recent rate cuts.
The investment returns of the major markets for one and three months, financial year, and one year to 30 November are summarised below.
Market Performance – 30 November 2019
Overseas Equities (Hedged into AUD)
Overseas Equities (Unhedged into AUD)
Emerging Markets (Unhedged into AUD)
Australian Property (Unlisted)
Australian Property (Listed)
Global Listed Property (Hedged into AUD)
Overseas Bonds (Hedged into AUD)
Australian Dollar vs. US Dollar
Source – JANA, FactSet
The Australian equity market returned a modest 3.2% in November, with the Information Technology (10.6%) and Healthcare (8.8%) sectors posting the largest gains, while the Financials sector (-2.0%) was the main detractor. Mid cap stocks returned 4.1%, outperforming large caps (3.3%) and small caps (1.6%) over the month. Australian Property Trusts (2.3%) outperformed Global Property Trusts (-0.9%) for the month.
The MSCI World ex-Australia Index (hedged into AUD) rose 3.2% over the month. In developed markets, New Zealand (9.4%) and Ireland (7.1%) outperformed the broader market, while Hong Kong (-1.6%) was unsurprisingly the poorest performer given ongoing social and political turmoil. The MSCI Emerging Markets Index returned 1.7% despite a number of countries sensitive to the US dollar strength lagging the broader market, most notably Chile (-3.7%) and Columbia (-1.1%). Pakistan (11.0%) registered strong returns as banking stocks led the market higher, whilst Turkey (7.6%) also rebounded posting strong returns.
The Australian Dollar finished lower against all the major developed market currencies, most notably the NZD (-1.9%), USD (-1.8%) and the Pound Sterling (-1.8%).
Australian bonds and Overseas bonds delivered negative returns over the month.