The US midterm elections were the height of November’s issue. US markets seemed disappointed that the Republicans were not able to achieve a knockout win that was expected. Most sectors were fluctuating trying to resist, while bitcoin continued to crash. The market also hit record high since 2020 after weaker-than-expected inflation supported investor hopes that inflation had peaked. In Australia, the Reserve Bank raised the official cash rate to 3.1% in an eighth consecutive move. November 2022 was a volatile month.
US markets
US markets were stronger in the month, with the Dow Jones up +5.7% and S&P500 up +5.4%, as data which revealed US inflation cooling in October by more than forecast.
European markets
European markets were higher with the Stoxx Europe 600 Index up +6.8%, UK FTSE up +6.7% and German DAX up +8.6%.
Asian markets
Asian markets were higher over the month, with the Nikkei up +1.4% and KOSPI up +7.8%. The Shanghai Composite gained +8.9%, amid a slew of positive developments with China making significant changes to the stringent Covid-zero policy, Chinese officials vowing to speed up Covid shots for the elderly and to avoid excessive restrictions.
Commodities
Over the month, WTI oil price declined -5.7% to US$80.55/bbl, as OPEC+ reduced its forecasts for global oil demand again, lowering estimates for the amount of crude it will need to pump in 4Q22 by 520k barrels a day.
ASX performance
The ASX200 gained +6.1%.
In political news:
US mid-terms saw the Republicans take control of the House of Representatives and Democrats take control of the Senate.
US-China trade tensions continued to simmer with the Federal Communications Commission imposing a ban on electronic equipment from Huawei Technologies Co and ZTE Corp, continuing a years-long effort to limit the reach of Chinese telecommunications companies into US networks.
In economic news:
Australian RBA decision – RBA downshifted to smaller rate hikes, increasing cash rate by +25bps to 2.85%, the highest level since April 2013
Global growth outlook – OECD announced the world’s central banks must keep raising interest rates to fight soaring and pervasive inflation, even as the global economy sinks into a significant slowdown, as it upgraded 2022 world GDP growth by +10bps to +3.1% (varied by countries).
US Consumer confidence fell in November to a four-month low with a gauge of current conditions decreasing to the lowest since April 2021, amid the double blow of rising interest rates and persistent inflation.
China – Economic activity contracted further in November with official manufacturing PMI falling to the lowest since April and both manufacturing and non-manufacturing PMI staying in contraction territory.
Australia – Consumer sentiment tumbled to the lowest level in 2.5 years in November with pessimists greatly outnumbering optimists as expected inflation rate, which measures consumer inflation expectations over next 12-months, rose to a 4-month high of 6%.
Europe – ECB President Christine Lagarde said that borrowing costs will continue to rise even as economic activity slows down in the face of record inflation, announcing she’d be surprised if euro-zone inflation had peaked, despite data revealing euro-zone inflation slowed for the first time in 1.5 years in November.
U.K. Office for Budget Responsibility (OBR) announced the UK has officially fallen into a recession with economy expected to shrink -1.4% in 2023 (vs prior forecast of +1.8% expansion), which will push more than 500,000 people into unemployment with household incomes, once adjusted for inflation, falling back to 2013 levels and taking at least six years to recover.
Japan – Economy unexpectedly shrank in 3Q22 with GDP contracting at an annualized pace of -1.2%, slipping into reverse for the first time since last year, as the yen’s historic slide battered growth momentum. Japanese consumer confidence dropped for a third straight month in November, the worst since June 2020.
India – Economy grew at a slower pace in 3Q22 with GDP growing +6.3% y/y vs +13.5% y/y in 2Q22, with RBA forecasting the economy to remain on track to expand by ~7% in 2022-23, as supply responses gain strength, demand improves amid easing inflation and the banking system returns to health.
New Zealand – RBNZ raised interest rates by a record +75bps to 4.25% and signaled further tightening ahead.
On stock specific news:
Elders Ltd (ELD) – declined -20.6%, after missing FY22 net income consensus estimate and announcing CEO and MD Mark Allison plans to retire on or before 14 November 2023.
Evolution Mining Ltd (EVN) – gained +29.3%, after reaffirming FY23 gold production forecast of ~720,000 oz.
Origin Energy Ltd (ORG) – gained +41.1% after receiving a non-binding, conditional offer at A$9/share cash.
Xero Ltd (XRO) – declined -9.5%, after missing 1H23 consensus earnings estimate and announcing CEO Steve Vamos will retire in January.
This Monthly Market Wrap snippet was provided courtesy of BanyanTree Investment Group.
Banyantree gives clients the confidence to invest, by offering institutional quality investment research and investment management.
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