Global Markets

 

The outcome of the US election was the primary driver of market performance in November. Donald Trump’s presidential victory and Republican control of Congress fueled expectations of tax cuts and regulatory reform. Investors saw these as potential drivers of future economic growth. 

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Global equity markets ends November positively, rising 3.8% for the month. US large-cap stocks surged 5.9%, while domestically listed US small-cap stocks gained an impressive 11%. European markets, however, dropped as investors assessed the potential impact of trade tariffs. Emerging markets faced challenges, falling 3.5%. 

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In the bond market, corporate bonds mirrored the positive sentiment in equity markets. US highyield bonds returned 1.1% and UK corporate bonds also rose. Government bonds started the month on a weaker footing due to election-related uncertainty and concerns over inflation. Ultimately, they returned around 1.7% in the UK and 1% in the US. 

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As of 29 November 2024: 

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UK 10 Year Gilt Yield 4.24% 
US 10 Year Treasury Yield 4.18% 
Germany 10 Year Bund Yield 2.09%

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UK Market

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According to initial estimates from the Office for National Statistics (ONS), the economy grew by 0.1% in the third quarter of 2024 compared to the previous quarter. The ONS also released that unemployment stood at 4.3% in the three months to September, slightly higher than the 4% recorded in the previous quarter. Wage inflation remained strong at 4.8% (excluding bonuses), well above the rate of inflation. 

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On 7 November 2024, the Bank of England's Monetary Policy Committee (MPC) voted to cut the Bank's key interest rate to 4.75%. It felt able to do so because inflation remains close to the Bank’s target of 2. The Bank's analysis indicates that the Autumn Budget has increased inflation by approximately 0.2 to 0.4 percentage points by the end of 2027. Forecasts suggest that inflation will still be below the 2% target by that time.

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Ark Insights

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November was a month of digesting changes as businesses and governments assessed the implications of the Autumn Budget and the US presidential election. 

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UK equities, primarily in the domestic market, rose during the month, partially recovering losses incurred following the October Budget announcement. Long-term government borrowing costs stabilised, even declining slightly in November. These two factors reinforce the expectation of no major policy shifts from the new Labour government in the near term. 

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The UK services sector cooled, with S&P Global's UK Services Purchasing Managers' Index (PMI) falling in November. While the PMI remained above 50 (at 50.8), it reached its lowest level since November 2023. 

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As always, your advisors would be more than happy to help you with any queries.

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The views expressed in this update are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument. The views reflect the views of Ark Investment Management at the date of this document and, whilst the opinions stated are honestly held, they are not guaranteed and should not be relied upon and may be subject to change without notice. Investments entail risks. Past performance is not necessarily a guide to future performance. There is no guarantee that you will recover the amount of your original investment. The information contained in this update does not constitute investment advice and should not be used as the basis of any investment decision. Any references to specific securities or indices are included for the purposes of illustration only and should not be construed as a recommendation to either buy or sell these securities or invest in a particular sector. If you are in any doubt, please speak to us or your financial adviser as appropriate.

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