November best month since 2020 for global equities

US equities closed mostly higher in November, with the S&P 500 and Russell 2000 logging over 8% gains, while the Dow reached its highest close since January 2022. The Nasdaq closed lower, impacted by a string of tame inflation readings. European shares hit a more than three-month high, with the Stoxx 50 posting its biggest monthly jump since January, driven by data showing a drop in inflation in the US and Eurozone, boosting expectations of central banks cutting interest rates.  

Summary for 01.12.2023 

• Asian markets faced declines on Friday due to mixed economic signals from China, including conflicting manufacturing data. Concerns over US tech shares, falling oil prices, and rising bond yields also contributed, prompting profit-taking after strong November gains.  
• European shares are anticipated to extend gains following their best month since January while US equity futures were mixed as uncertainty looms as Federal Reserve Chair Jerome Powell’s comments in a later “fireside chat” could impact market sentiment. 
• Oil prices fell in Asian trade this morning, extending losses from the previous session as OPEC+ implemented smaller-than-expected supply cuts, coupled with weak data from China raising concerns about worsening demand. The voluntary nature of the cuts and a rebound in the dollar further pressured crude markets, leaving to a weekly dip in prices despite hopes for deeper supply reductions. 
• Israel resumed combat operations in Gaza after a temporary truce with Hamas expired, accusing the militant group of breaking the cease-fire. The week-long truce saw the release of over 100 hostages by Hamas and other Gaza militants in exchange for 240 Palestinians freed from Israeli prisons. 
• Chinese manufacturing activity unexpectedly rebound in November, with the Caixin PMI rising to 50.7, indicating expansion, driven by a mild increase in domestic demand and supportive measures. This contrasts with government data showing a decline, highlighting the significance of both surveys, while economists suggest the need for more policy support to strengthen consumption and employment despite overall economic recovery. 
• In October, PCE inflation in the US continued to decline, with the headline reading dropping to 3%, and core PCE easing to 3.5% year-over-year, below the Fed’s own estimate. Market expectations have shifted to pricing out further rate hikes, anticipating policy rate cuts to commence in H1 2024, while the Fed may opt to keep rates higher for longer to ensure a sustainable decrease in inflation towards its 2% target. 
• Initial jobless claims in the US slightly exceeded expectations at 218,000 last week, while continuing jobless claims rose to 1,927,000, the highest since November 2021. Although still below their 30-year averages, the increase in continuing claims suggests a potential evening out of the labour market imbalance between demand and supply. 
• In November, the Euro Area’s inflation rate dropped to 2.4% year-on-year reaching its lowest point since July 2021 and falling below the expected 2.7%. The core rate, also decreased to 3.6%, below the forecasted 3.9%, with energy costs tumbling by 11.5%, contributing to the largest monthly decline in consumer prices since January 2020. 
• China Evergrande Group, the heavily indebted property developer, is reportedly making a last-minute debt restructuring proposal to avert potential liquidation before a Hong Kong court hearing on Monday. However, sources suggest that creditors are unlikely to accept the new proposal due to low recovery prospects and increasing concerns about Evergrande’s future, as it grapples with over $300 billion in liabilities, exemplifying a broader crisis in China’s property sector.  
• Tesla’s long-awaited Cybertruck, priced between $60,990 and $99,990, was unveiled yesterday by CEO Elon Musk, showcasing its stainless steel design and emphasising utility and speed. Despite the higher pricing, Musk claims the Cybertruck has “more utility than a truck” and is “faster than a sports car,” with deliveries set to begin next year. 
• Ulta Beauty raised the lower end of its full-year profit and sales forecasts, citing strong demand for luxury skincare and fragrances, leading to a 12% rise in its shares in extended trading. The beauty retailer’s Q3 results beat expectations, with quarterly net sales rising 6.4% to $2.49 billion, and Ulta’s CFO Scott Settersten announcing his retirement in April 2024. 
• Dell Technologies reported Q3 revenue of $22.3 billion, down 10% year-over-year, missing estimates, and Q3 EPS of $1.88, beating expectations of $1.46. Shares fell more than 3% in after-hours trading as Infrastructure Solutions Group and Client Solutions Group revenues declined 12% and 11% year-on-year, respectively. 
• Ford Motor Co. fell 3.1% yesterday, erasing earlier gains after the company reissued its guidance for fiscal 2023 after withdrawing its forecast in October following the since-resolved United Auto Workers strike. Ford said it expects full-year 2023 adjusted earnings before interest and taxes of $10 billion to $10.5 billion, which includes $1.7 billion in strike-related lost profits.  
• AbbVie has announced its acquisition of ImmunoGen for $10.1 billion in cash, aiming to strengthen its cancer treatment portfolio amid challenges to its top-selling drug Humira. ImmunoGen’s shares surged 83 on the news, reaching a near 23-year high, as AbbVie looks to integrate ImmunoGen’s antibody-drug conjugate Elahere to offset Humira’s loss of exclusivity. 
• Farfetch shares surged 8% yesterday after Citigroup upgraded its rating from Sell to Neutral, citing market volatility and speculation about a potential private takeover by founder Jose’ Neves. The shares have experienced significant volatility, including a recent 44.8% drop when Richemont reported no plans to invest in or lend to Farfetch.