Financial markets were in good spirits in November. Both in Europe, the UK and the US saw signs of falling inflation. And while the U.S. economy appears to be the most robust, there is a growing belief that the economy will not deteriorate here in Europe either. After a long period of interest rate hikes, investors may start to look forward to interest rate cuts. In our little country, the result of the Lower House elections raised eyebrows internationally, but it was of no importance to the financial markets, however. The announcement of OPEC’s oil supply cut was: oil prices fell nearly 6% on a monthly basis.
Shares
After three weak months, we saw a strong recovery in equity markets in November. The MSCI All Countries World Index (measured in euros) was as much as 5.8% higher. Developed markets (+6.0%) outperformed emerging markets (+4.6%). Within developed markets, Europe led the ranking (+6.4%), ahead of the U.S. (+6.0%), Japan (+5.2%) and Pacific excluding Japan (+3.6%). Emerging markets were also higher in one region. China was the dissonant with a minus of 0.7%. On the other hand, we saw a very strong performance from Latin America (+10.4%). Asia (+4.2%) and EMEA (+3.1%) were closer to average. A significant difference was noticeable between stocks with the style growth (+7.5%) and value (+4.0%).
Bonds
Lower inflation led to lower interest rates in major markets. In November, U.S. 10-year rates fell 0.60% to 4.33%. German 10-year rates also fell sharply, but less sharply (down 0.36% to 2.45%). The Netherlands stayed close to this: 0.37% lower to 2.78%. The risk attitude of investors became more risk-seeking. Premiums declined for all categories in November. For emerging market government bonds, the premium fell 0.32% to 4.05%. For less risky corporate bonds we saw a decline of 0.14% (to 1.45%), and for more risky corporate bonds the decline was as much as 0.53% (to 4.23%).