November 2 0 2 4 • I S S U E 47

November Markets

November 2024 witnessed significant movements across global financial markets, with major indices reflecting varied performances influenced by political developments, economic data, and sector-specific trends. The re-election of President Donald Trump on the 5th of November played a pivotal role in shaping market sentiments, leading to notable gains in U.S. equities and impacting global markets.

U.S. Markets

U.S. equities experienced robust growth in November. The S&P 500 Index rose by 5.9% over the month, closing at a record high. The Dow Jones Industrial Average (DJIA) increased by 7.5% over the month, approaching the 45,000 mark. These gains were largely driven by investor optimism following President Trump's re-election, with expectations of favourable tax policies and deregulation. The technology sector, represented by the Nasdaq, also saw a 6.2% increase, its highest increase since May, bolstered by strong performances from companies like Tesla, which surged 38% during the month. 

Eurozone

European markets exhibited modest gains in November. The Stoxx Europe 600 Index rose by 1% over the month which was its first monthly gain since August, supported by positive corporate earnings and a slight uptick in economic activity. However, the euro depreciated by almost 3% against the U.S. dollar, marking its worst monthly performance since early 2022. This decline was attributed to concerns over potential U.S. tariffs and political uncertainties within the region.  Despite these challenges, sectors such as consumer goods and industrials contributed to the overall positive performance.

UK Markets

The UK market showed resilience, with the FTSE All-Share Index advancing by 2.5% in November. Retailers experienced a boost due to strong consumer spending during the Black Friday sales, with expectations of £9.5 billion in sales. Additionally, the Bank of England (BoE) cut its main policy rate by 25 basis points as expected, providing stability and supporting investor confidence. However, the potential for higher inflation and future tariff implementations by the U.S. introduced a degree of caution amongst investors, with the overall picture remaining positive for the month past.

Asia Emerging Markets

Asian Emerging markets faced mixed outcomes. Overall, the MSCI Asia Ex-Japan Index was down 3.3% for the month, influenced by weaker performances in Chinese equities due to ongoing property market challenges and regulatory uncertainty. In terms of global Emerging Markets as a whole, the MSCI Emerging Markets Index declined by 3.6% over the month. Conversely, markets in Southeast Asia, such as Vietnam and Indonesia, experienced gains driven by strong domestic demand and favourable export conditions. The easing of U.S. dollar strength also provided some relief to these economies.

Commodities

Commodity markets experienced volatility throughout November. Oil prices fluctuated due to geopolitical tensions in the Middle East and varying demand forecasts. Gold prices fell 3% over the month with a stronger US Dollar making the price more expensive for buyers in other currencies and therefore decreasing demand. Despite this Commodity prices as a whole saw a slight gain of 0.4% for the month.

Conclusion

November 2024 highlighted the interconnectedness of global markets, with US political developments significantly influencing international investor behaviour. While US equities reached new highs, other regions exhibited varied performances based on local economic conditions and external factors. Commodities remained sensitive to geopolitical events, underscoring the importance of a diversified investment approach. 

Trump Treasury Secretary Pick & Tariffs: Economic Implications and Analysis

President-elect Donald Trump has unveiled key cabinet appointments, signalling the administration's economic direction. A pivotal nomination is Scott Bessent as Treasury Secretary, a seasoned hedge fund manager with a notable investment background. This selection, along with Trump's proposed tariff policies, is poised to significantly influence the US economy.

Scott Bessent's Appointment as Treasury Secretary

Scott Bessent, 62, is the founder of Key Square Group and formerly served as a top investor for George Soros. His nomination as Treasury Secretary has been well-received by financial markets, with the Dow Jones Industrial Average surging 440 points to a record close on Monday the 25th of November following the announcement.

Bessent's extensive experience in global macro investing and his reputation as a savvy businessman has bolstered confidence among business leaders and market participants. His economic philosophy aligns with several of Trump's key priorities. He advocates for tax cuts, spending reductions, and maintaining the US Dollar's status as the world's reserve currency. Notably, Bessent supports making permanent the tax cuts introduced during Trump's first term and eliminating taxes on Treasury Inflation-Protected Securities (TIPS), Social Security benefits, and overtime pay. His "three arrows" strategy aims to cut the budget deficit, increase GDP growth, and boost oil production, reflecting a comprehensive approach to economic management.

Economic Implications of Bessent's Nomination

Bessent's appointment is expected to bring a market-friendly approach to economic policy. His background suggests a focus on pro-growth and deficit-reduction policies, which have somewhat lessened concerns over the US budget deficit and potential inflation from tariffs.

Investors view Bessent as someone who will listen to Wall Street and refine policy edges to maximise positive market impacts, particularly concerning tariffs and other economic issues. However, Bessent's influence over tariff policies may be limited, as President Trump has emphasised his role as the primary decision-maker on economic matters. This dynamic suggests that while Bessent may advocate for stability and market-friendly policies, the administration's trade agenda could still pursue aggressive tariff strategies.

Trump's Expected Use of Tariffs in Economic Policy

President Trump plans to implement substantial tariffs on imports to support American producers and workers. Tariffs also seek to enhance government revenue without explicitly increasing taxes and to shift the tax burden from income and wealth to consumption.

The administration's trade agenda could resemble a three-phase process similar to the 1985 Plaza Accords, involving initially optimistic financial conditions followed by a phase of real tariffs, countermeasures, and economic distress before a global deal is struck to rebalance trade and capital flows. This scenario might lead to the depreciation of the dollar and mutual reduction of tariffs, stabilising the dollar and encouraging global economic stability.

Conclusion

The nomination of Scott Bessent as Treasury Secretary, coupled with President Trump's proposed tariff policies, indicates a strategic approach to economic management. Bessent's market-friendly stance and comprehensive economic strategies are expected to foster growth and stability. However, the administration's aggressive tariff agenda presents challenges that will require careful navigation to balance domestic economic objectives with global trade dynamics.

Sources

"S&P 500, Dow Notch Records to Cap Best Month of the Year," The Wall Street Journal, December 1, 2024.

"Stock Market Today: S&P 500 and Dow Post Gains and Close Out Best Month of 2024," Associated Press, November 30, 2024.

"World Markets Head for Reality Check After Month of Trump," Reuters, November 29, 2024.

"How to Invest in the Black Friday Boom," The Times, December 1, 2024.

"Major Asset Classes: November 2024 Performance Review," Seeking Alpha, December 3, 2024.

"Dow hits all-time closing high as Trump's Treasury pick Scott Bessent promises to slash taxes, spending" New York Post

"Why CEOs Are Cheering Donald Trump's Pick for Treasury Secretary" Time

"Scott Bessent Sees a Coming 'Global Economic Reordering.' He Wants to Be Part of It." The Wall Street Journal

"Trump's Bessent pick for Treasury boosts hopes for year-end stock-market rally" MarketWatch

"Trump's Tariff Message: I'm in Charge of the Economic Agenda" The Wall Street Journal

"Free trade, RIP: Trump's new tariffs are multi-warhead weapons" The Times

"The coming clash between Trump and Wall Street" Financial Times