Market Pulse - November 2022

• Market Pulse
• 06.12.22
• ILIM

Key themes

• Both equities and bonds rallied strongly in November as speculation grew that the pace of US Federal Reserve (Fed) interest rate rises would soon begin to slow.
• Weaker-than-expected inflation readings in both the US and the Eurozone contributed to the belief that an upcoming policy pivot from central banks was now more likely.
• Signs that China was beginning to relax its zero-tolerance Covid-19 policy and slowly moving towards a reopening of the economy led to an improvement in sentiment around Chinese growth.

Markets snapshot

•  The MSCI AC World equity index rose 6.3% (3.5% in euros).
• US equities lagged, rising 5.4% (1.2% in euros) on suggestions the Fed could begin to slow the pace of interest rate rises from December.
• Emerging market equities outperformed, rising 11.7% (10.2% in euros), benefiting from improving sentiment around the Chinese growth outlook.
• Pacific Basin ex Japan equities rose 10.7% (10.1% in euros), similarly benefiting from improved China sentiment, with Hong Kong being strong, up 23.1%.
• The Eurozone >5-year bond index rose 3.8%, and German 10-year yields fell to 1.93%, as Eurozone inflation surprised to the downside, appearing to have peaked.
• The euro rose 5.3% against the dollar to 1.0315
• Commodities fell -1.7% (-5.6% in euros). Brent oil fell -9.9% on suggestions that OPEC+ could respond to US pressure and was considering a surprise increase in production at its December meeting. Having fallen through late summer, European gas prices rose in November.
• Gold rose 7.1%, supported by a weaker US dollar and falling US real yields. Metals were higher on improving sentiment towards Chinese growth in 2023, with copper rising 10.5% and aluminium 11.5%.