15 November 2024 Economic Overview - By efpc
Global equities returned to gains in November on the back of Donald Trump’s presidential victory and the Republicans securing a majority in both chambers of Congress. This drove market performance and saw the so-called ‘Trump Trade’ back in full swing.
Trump’s America-first, pro-growth stance, with the prospect of tax cuts and expansionary fiscal policy, saw United States (US) equities outperforming other regions, rallying to their best monthly performance in 2024. At a sector level, financials, technology, and energy stocks were the beneficiaries of potential deregulation.
Elsewhere, sentiment was less optimistic, given uncertainties around US foreign policy and potential retaliation from other regions. Emerging markets were the worst affected, underperforming developed markets by almost 10%, while European markets also lagged. Within emerging markets, China was the worst performer amid concerns around trade conflicts and a lack of confidence in stimulus measures implemented to support the economy.
South African equities also moved lower in line with its emerging market peers. The key detractors were the Chinese-exposed heavyweights Naspers and Prosus (-2% for the month), as well as miners (-7% for the month), who struggled under lower gold and platinum group metal prices.
The following were some of the key themes from November:
+ US markets shone: The Dow Jones Industrial Average and the S&P 500 delivered their strongest monthly gains of the year, climbing 7.5% and 5.7%, respectively. The Nasdaq Composite also surged, gaining 6.2%, its best monthly performance since May.
+ Bitcoin rallied: Bitcoin closed November at $97 400, just shy of the $100 000 milestone that it briefly touched recently. Despite the dip, the cryptocurrency has gained more than 35% since the US election, fuelled by optimism that a Trump-led administration and a crypto-friendly Congress may support policies favourable to digital assets.
+ Tesla had a stellar month: Tesla shares increased by 38% in November, driven by post-election optimism, pushing the electric vehicle maker’s market capitalisation to nearly $1.1 trillion.
+ Rand under pressure: The rand depreciated by 2.6% against the US dollar in November, primarily owing to a strengthening greenback.
+ South African Reserve Bank (SARB) rate cuts: The SARB cut rates by another 0.25% in November, moving in line with its US counterparts. The cut was consistent with expectations but somewhat disappointing, given headline inflation figures falling to 2.8% year-on-year.
+ Chinese stimulus disappointed: China announced a $1.4 trillion local debt package early in November. This package is aimed at bailing out local governments and stabilising the economy, as fresh pressure is faced from potential trade tensions with the US. The package, however, disappointed investors, as there is still a lack of direct stimulus and support for households.
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