Market Key Points
- Global markets continue to deal with the uncertainty caused by the lack of data coming out of the US and the future path of interest rates by the Federal Reserve.
- Equity markets took a breather in November after a strong calendar year of returns, as growth stocks took a back seat to value.
- Global Real Estate and Infrastructure outperformed the higher risk asset classes.
Australian equities
The S&P/ASX 200 Accumulation Index fell 2.7% in November, with seven of 11 sectors closing lower. Information Technology (-11.6%) led declines, followed by Financials (-6.5%) and Property (-3.9%). In contrast, Health Care (+2.0%), Consumer Staples (+1.6%), Materials (+1.6%), and Industrials (+0.2%) posted gains. The S&P/ASX Small Ordinaries Index also paused its strong run, falling 1.5%, though it remains up 19.4% over 12 months versus 5.5% for the broader index, as smaller companies continue to outperform large caps.
Top performers included Light & Wonder Inc (LNW), which surged 39.8% on strong Q3 earnings and reaffirmed FY25 NPATA guidance of $500–575 million. Lithium stocks such as IGO (IGO), Pilbara Minerals (PLS), and Liontown Resources (LTR) also rallied on sharply higher lithium prices. Conversely, DroneShield (DRO) plunged 48.3% after insider stock sales and the abrupt resignation of its US CEO, while Temple & Webster (TPW) fell 34.8% following a disappointing AGM trading update.
Economic data showed annual CPI rising to 3.8%, above expectations and outside the RBA’s 2–3% target range. The RBA held rates at 3.6%, signaling only one additional cut in 2026, with inflation expected to remain above 3% until 2027.
Global Equities
Global equities edged higher, with Developed Markets up 0.2% (MSCI World Ex-Australia Index, AUD). US equities were broadly flat, with the S&P 500 up 0.1%, now 13.5% higher year-on-year, as earnings season ended strongly with over 80% of companies beating expectations. Factor performance reversed recent trends: Growth (-3.8%), Quality (-2.4%), and Momentum (-3.0%) fell sharply, while Value (+0.0%) held steady. Global small caps outperformed, returning 1.6%.
European markets were muted, with the UK’s FTSE 100 flat, Germany’s DAX down 0.5%, and the FTSE Eurotop 100 up 1.2%. Japan’s Nikkei 225 dropped 4.1%, though rolling 12-month returns remain strong at 31.5%.
US economic data was mixed amid the government shutdown. Unemployment rose to 4.4%, the highest since October 2021, while jobless claims hit a three-year high. However, non-farm payrolls rebounded, adding 119,000 jobs, beating expectations. Consumer sentiment improved slightly post-shutdown, with the Michigan Index at 51.0, below forecasts and near record lows.
Commodities were mixed, with the S&P GSCI down 0.3%. Copper rose 3.3% and gold surged 5.9%, bringing three-month and 12-month gains to 23.0% and 61.4%, respectively. Iron ore was steady, while oil fell 3.8% on oversupply concerns.
Emerging Market Equities
Emerging market equities underperformed developed markets in November, falling 2.6% (MSCI Emerging Markets Index, AUD). In China, the CSI 300 declined 2.5% as domestic economic concerns weighed on sentiment. Manufacturing activity remained weak, with the NBS Manufacturing PMI at 49.2, marking the eighth consecutive month of contraction. The NBS Non-Manufacturing PMI also slipped into negative territory at 49.5, its lowest level since December 2022. On a positive note, CPI rose 0.2% year-on-year in October, slightly above expectations and marking the first increase in consumer inflation since June.
Fixed Income
U.S. 10-year Treasury yields eased 6bps to 4.02%, as limited economic data during the government shutdown added uncertainty around the Fed’s next move. By month-end, expectations shifted toward another rate cut in December. UK Gilts were the standout performer, with yields falling sharply on dovish signals from the Bank of England following softer inflation data.
Japanese government bonds continued to underperform, with yields rising amid concerns over sustaining expansionary fiscal and loose monetary policies. Domestically, Australian 10-year bond yields climbed 21bps to 4.51%, as strong inflation data dampened hopes of near-term rate cuts heading into 2026.
Property and Infrastructure
The S&P/ASX 200 A-REIT Accumulation Index fell 3.9% in November, reducing rolling annual returns to 0.8%. Global real estate equities outperformed, rising 2.1% (FTSE EPRA/NAREIT Developed Ex Australia Index, AUD Hedged), while global infrastructure delivered strong gains of 3.2% (S&P Global Infrastructure TR Index, AUD Hedged).
This article contains information first published by Lonsec. Voted Australia’s #1 Research House for 2019.
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