All things Market Related – November 2019

 

 

 

 

Australia

The ASX200 Index closed the month relatively flat, down 0.37%. The market was largely unchanged for the course of the month despite record low interest rates and ongoing trade tensions. Losses in the big banks and Telstra was offset by gains in the healthcare and industrials sectors. Pharmaceutical & Biotechnology products rose the most up 9.6%. ANZ shares took a battering after it posted a disappointing set of results which came in lower than expected and NAB posted a solid FY19 results (in line with consensus estimates) despite difficult trading conditions.

In economic news, the RBA held off and kept rates at 75bps despite ongoing concerns about household spending and the growing impact of the drought on consumer spending. The central bank says gross domestic product would grow by 3.3% this year following an uptick in economic prosperity. This means there is almost no chance of a Christmas rate cut. Markets are however expecting one in February next year.

 

Global Markets

Wall Street closed up 0.48% and the S&P 500 was up 2.03%. Global equity markets closed in positive territory supported by a US interest rate cut, positive US-China trade negotiations, and better than expected US company earnings results. This all translates into better economic activity which has helped ease earlier recession concerns.

EU markets performed reasonably with consumer discretionary, industrials and materials were among the top gaining sectors.  Consumer staples and utilities fell during the month. Volkswagen shares rose during the month after the company posted a 43% rise in pre-tax profits for Q3.

The UK equity market closed the month in negative territory. The Government has however, negotiated a revised Withdrawal Agreement with the European Union and the Parliament voted in favour of an early general election.

Asian markets were generally stronger as investors become hopeful that a US-China trade deal will be done. This in turn dover investor sentiment. The Japanese market recorded a gain of 5.0%.

 

November outlook:

There are two things Australian investors need to keep their eyes on:

  • The likelihood of a November rate cut has dropped from 12% to 4%.
  • Banks go Ex -Dividend so money flows out of the market.
  • Growing fears of recession have abated
  • Trump impeachment still ongoing
  • Retailers gearing up for Christmas sales period

 

Here are a few useful charts and tables from BanyanTree Research.