November’s investment market commentary

November was a good month for investors as riskier assets surged in value, led by a change in the fortunes of those parts of the market that had suffered since the pandemic hit, as Andrew Yeadon’s update explains.
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Published 7 December
3 mins

November was a remarkable month for investors as riskier assets surged in value, led predominantly by those parts of the market that have done poorly since the pandemic hit. Coming into the month, markets were a little jittery on the back of concerns about the US election, the lack of agreement on the second US stimulus package, and the rapid spread of COVID-19 across Europe and the US. However, the market responded very well to Biden’s victory and the congressional results of the US elections, and cheered even louder as news filtered through about successful vaccine trials from Pfizer/BioNTech, Moderna and AstraZeneca/Oxford University. At last, the world can visualise the path back to normality, even if the full rollout of inoculation programmes will take many months.

Economic data in the US and Europe generally came through on the weak side as the restrictions required to combat the next wave of COVID-19 cases inevitably constrained activity. Even so, financial markets looked through the dip towards the post-COVID-19 recovery anticipated in 2021, with cyclical stocks and riskier debt leading performance within their asset classes.

Brexit negotiations marched on against a ticking clock, with hints from both sides that a deal was within their grasp, even as continued bouts of brinksmanship kept currency traders on their toes. As the 31 December transition-end date has drawn nearer, the Pound’s sensitivity to the Brexit issue has increased, although most investors assume a ‘no deal’ will be avoided.

Equity markets turned in a spectacular return of +8.9% as measured by the MSCI All Country World Index in Sterling terms. The market rotation saw the hitherto weaker areas regaining some ground, with the UK (+13.2%) and Europe ex UK (+13.5%) outperforming, while the US (+8.1%), Emerging Markets (+5.9%) and Asia ex Japan (+4.7%) all underperformed. The rotation also carried through into sector performance, with cyclicals materially outpacing defensives. The strongest sectors were energy (+22.4%) and financials (+15.0%), with the weakest being utilities (+2.7%) and consumer staples (+4.7%). Style returns also conformed to the broader pattern, with value stocks (+11.3%) outpacing their growth (+6.9%) peers and smaller companies (+11.7%) performing better than larger companies (+8.9%).

Investors embraced risk with equal enthusiasm within fixed income, and this was reflected in riskier corporate bonds materially outperforming safe haven government bonds.  Over the month, the JP Morgan Global Government Bond Index rose +0.2%, while a sharp tightening of credit spreads helped the ICE Merrill Lynch Global Corporate Investment Grade Index advance by +2.0% and the Merrill Lynch Global High Yield Index by +4.0% (all hedged to Sterling).

Hopes of a brightening economic outlook boosted the Bloomberg Commodities Index by +0.3%, with crude oil (+21.6%) and industrial metals (+7.1%) posting very strong gains, while safe haven gold (-8.5%) suffered from declining investor interest.

While the Pound generally strengthened on hopes of a Brexit deal, the main theme in the foreign exchange markets was the weakness of the US Dollar. With respect to the major currencies, the US Dollar slipped by -2.3% versus the Euro, -0.3% relative to the Yen and -2.8% against the Pound. However, it was particularly weak when judged against some of the commodity-related and Emerging Market currencies, with the US Dollar falling -4.3% against the Australian Dollar, -6.7% versus the Brazilian Real, -4.8% relative to the South African Rand and -4.7% against the Mexican Peso.

(Notes: All monthly data is quoted in Sterling terms unless otherwise stated).

FTSE 1005577.276266.19
DJ Ind. Average26501.629638.64
S&P Comp3269.963621.63
Nasdaq 10011052.9512268.32
£ Base Rate0.100.10
Brent Crude37.9447.88

This month’s values quoted as at 30/11/2020. The above values are sourced from Bloomberg and are quoted in the relevant currency.

Clients of Nedbank Private Wealth can get in touch with their private bankers directly to understand how their portfolios are responding to market events or call +44 (0)1624 645000 and speak to our client services team.


If you would like to find out more about how we help manage clients’ investments, please also contact us on the number above. Or you can get in touch using the links to the forms towards the end of this page.

Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned here may not be suitable, and is included for information only and is not a recommendation. You should always seek professional advice before making any investment decisions.

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