In November US shares outperformed other markets following Donald Trump’s victory in the Presidential election. Other markets came under pressure amid worries over trade tariffs Trump threatens to impose, including against the US' main trading partners Mexico and Canada, resulting in condemnation and warnings from its leaders.

US markets gained on expectations that Trump's program will lift growth, lower taxes and cut regulation. In addition to regaining the White House, the Republican party also gained control of both chambers of Congress which could make it easier for Trump to implement his campaign promises. The Dow Jones, S&P500 and Nasdaq Composite indexes gained 7,54%, 5,73% and 6,21% respectively in November.

In addition the dollar gained 2,83% against the Euro, closing the month at 1,0575USD/EUR, due to lower expectations for the Federal Reserve to continue cutting the interest rate as the planned tariffs would likely boost inflation once again. Nonetheless the FED lowered interest rates once again by 25 basis points to 4,50-4,75% at its November meeting, saying that labour market conditions had generally eased although inflation was still somewhat elevated. The nonfarm payrolls report showed just 12,000 jobs were added in October. However the report was considered an outlier due to the impact of hurricanes and worker strikes. Annual inflation ticked up to 2,6% in October from 2,4% in September.

The strength of the dollar caused the gold price and other precious metals to retreat with gold futures losing 3,35% to 2681$ per ounce and silver futures shedding 6,41%.

European indices were mixed with the german DAX gaining 2,88% while the French CAC dropped 1,57% and Eurostoxx50 lost a modest 0,48%. Slovenia's SBI top gained 1,49% in November. Exporters were in focus amid concerns over potential tariffs from the US, as well as weakening demand from China, but the stronger dollar may prove beneficial for exporters. Euro area annual inflation stood at 2,3% in November, up from 2,0% in October. This is still close to the ECB's target rate and unlikely to affect the European Central Bank’s monetary easing. The ECB is expected to lower interest rates once again in December.

Also Asian stocks and especially exporters fell in November in the aftermath of Trump's election win and concern on potential tariffs with the Japanese Nikkei index dropping 2,23% while the Hong Kong Hang Seng index lost 4,40%, additionally fueled by heightened tensions over trade and technology.

Rudy Marchant
Fund manager Primorski skladi

Monthly reports - November 2024