Markets held up well through November, supported by solid company earnings and ongoing economic growth.
US companies announced solid performance, with earnings growing at their fastest pace in four years despite fears that President Trump’s sweeping tariffs would push up costs.
Strong results from technology companies central to the development of artificial intelligence (AI) helped lift indices higher, but earnings outside the “Magnificent Seven” also beat expectations.
Meanwhile, the outlook for the US economy remains positive – important because of America’s significant influence on global markets. Consumer spending continues to support economic expansion, and the jobs market remains reasonably healthy despite signs of a slowdown.
However, overall, market performance was modest by the end of the month, with stock markets finishing November broadly where they began. Lingering concerns about the rapid rise of AI, and initial doubts around whether there would be another US interest rate cut this year, led stocks to stumble. But it ultimately had little impact on overall returns.
Lilian Chovin, Head of Asset Allocation at Coutts, said: “Equity markets have been on an uninterrupted upward trajectory since the spring, so arguably we were overdue a little turbulence. The important thing for long-term investors like us is that the fundamentals – company performance, economic growth, fiscal and monetary policy – remain supportive.”
Business as usual for bonds
It was a relatively uneventful month for global bonds. US Treasury yields dipped slightly (prices rose) towards the end of November, as those initial concerns around whether the US Federal Reserve would cut interest rates gave way to greater optimism.
Japanese government bond yields rose to new highs (prices fell) after a $135 billion economic stimulus package was approved, marking the first major policy initiative under Japan’s new Prime Minister Sanae Takaichi. Yields also rose on persistently high inflation and expectations for rate increases by the Bank of Japan.
The value of investments, and the income from them, can fall as well as rise and you may not get back what you put in. Past performance should not be taken as a guide to future performance. You should continue to hold cash for your short-term needs.
