Global Economic Overview – November 2024

As of November 29, 2024, global financial markets are navigating a complex landscape shaped by geopolitical developments, economic policies, and sector-specific trends. Here’s an overview of current market prospects:

Global Equities

• U.S. Markets: Following the re-election of President Donald Trump, U.S. equities have experienced significant volatility. The S&P 500 has seen fluctuations due to proposed tariffs on Canada, Mexico, and China, which have raised concerns about potential trade wars and their impact on corporate earnings

• European Markets: European equities have faced challenges amid political uncertainties and economic slowdowns in key economies like Germany and France. The Stoxx Europe 600 index has shown modest gains, but investor sentiment remains cautious due to potential disruptions in trade relations with the U.S.

• Asian Markets: Asian equities present a mixed outlook. Japan’s Nikkei 225 has been bolstered by expectations of fiscal stimulus, while China’s markets are under pressure from a struggling property sector and regulatory crackdowns. The Hang Seng index has experienced volatility, reflecting investor concerns over economic policies.

Fixed Income

• U.S. Treasuries: Yields on U.S. Treasury bonds have risen, reflecting expectations of higher inflation and potential rate hikes by the Federal Reserve. The 10-year Treasury yield has reached levels not seen since 2008, indicating a shift in investor sentiment towards riskier assets.

• European Bonds: French government bonds are under scrutiny due to political instability and concerns over fiscal policies. The European Central Bank’s stance on interest rates remains a focal point for investors assessing the region’s economic health.

Commodities

• Oil: Crude oil prices have experienced fluctuations driven by geopolitical tensions in the Middle East and varying demand forecasts. Brent crude has seen both gains and losses, with market participants closely monitoring OPEC’s production decisions and global economic indicators.

• Gold: As a traditional safe-haven asset, gold has attracted investor interest amid market uncertainties. Prices have remained relatively stable, with movements influenced by inflation expectations and currency fluctuations.

Currencies

• U.S. Dollar: The dollar has strengthened against major currencies, supported by robust economic data and anticipated interest rate hikes. However, trade policy uncertainties pose potential risks to its trajectory.

• Euro and Yen: The euro has weakened due to economic challenges within the Eurozone, while the Japanese yen has appreciated following higher-than-expected inflation data, leading to speculation of a rate hike by the Bank of Japan.

Sector Highlights

• Technology: The tech sector has shown resilience, with companies like Nvidia driving gains. However, potential tariffs and supply chain disruptions could impact future performance.

• Energy: Energy stocks have benefited from rising oil prices, but the sector remains sensitive to geopolitical developments and regulatory changes.

Outlook

Analysts suggest that while opportunities exist, markets are likely to experience increased volatility due to geopolitical tensions, policy shifts, and economic data releases. Investors are advised to focus on policy developments rather than short-term political events and to maintain diversified portfolios to navigate potential risks.

In summary, global markets are at a crossroads, with various factors influencing asset prices and investor sentiment. Staying informed about policy changes and economic indicators will be crucial for making strategic investment decisions in the current environment.

 

SUMMARY OF MAJOR ECONOMIC AND MARKET
DEVELOPMENTS

Global Economy

• U.S. Presidential Election Impact: Following President Donald Trump’s re-election, markets experienced volatility due to proposed tariffs on Canada, Mexico, and China, raising concerns about potential trade wars and their economic implications.

• Eurozone Business Activity: November saw a significant decline in Eurozone business activity, with the services sector contracting and manufacturing deepening into recession, leading to expectations of further interest rate cuts by the European Central Bank.

• German Inflation: Germany’s annual inflation rate remained steady at 2.4% in November, defying expectations of an increase, while core inflation rose slightly to 3.0%.

Financial Markets

• U.S. Stock Market Performance: The Dow Jones Industrial Average and the S&P 500 reached record highs in November, driven by strong economic growth and investor optimism post-election.

• Global Semiconductor Stocks: Shares in the semiconductor sector rallied amid expectations of less stringent U.S. restrictions on chip sales to China.

• Japanese Yen Appreciation: The yen surged to a six-week high against the U.S. dollar, influenced by faster-than-expected inflation in Tokyo and growing expectations of a Bank of Japan interest rate hike.

Corporate Developments

• UniCredit’s Acquisition Bid: UniCredit announced a €10.1 billion all-stock bid to acquire rival Banco BPM, aiming to create a major Italian bank with a stronger European presence.

• Nvidia’s Market Capitalization: Nvidia’s market cap surpassed $3.6 trillion following the U.S. presidential election results, reflecting the company’s significant growth in the technology sector.

Policy and Economic Measures

• U.S. Tariff Plans: President Trump’s proposal to impose tariffs of 25% on Canadian and Mexican goods and 10% on Chinese products is expected to impact U.S. manufacturing and agriculture sectors, potentially leading to job losses and economic slowdown.

Reserve Bank of Australia Reforms: Legislation was introduced to restructure the Reserve Bank of Australia by creating separate boards for monetary policy decisions and governance, aiming to enhance transparency and decision-making.

Licensed by FINMA as a Swiss Asset Manager