Monthly Market Snapshot: November 2020

A monthly update on equity, fixed income, currency and commodity markets.

Views expressed are those of the authors and are subject to change. Other teams may hold different views and make different investment decisions. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional or institutional investors only.

Equities

Global equities (+11.5%) rose in November, ending the month with a 10.5% year-to-date gain. Markets rebounded sharply after two COVID-19 vaccines demonstrated high efficacy rates in Phase 3 trials, fueling optimism that the pandemic could be eradicated in the near term. Despite this favorable development, the logistical challenges of distributing and administering the vaccines are significant, and high COVID-19 case counts threaten to undermine the global economic recovery. In the US, infections hit record highs while the size and scope of an additional fiscal stimulus remained uncertain. In Europe, lockdowns and measures to curb the spread of the virus appear to have been effective, as new infections fell from their latest peak. Brexit negotiations reached a critical juncture, as pressure to secure a trade deal intensified ahead of the UK’s departure from the European Union (EU) at the end of the year. Poland and Hungary threatened to veto the EU’s budget over objections to a rule-of-law clause. Fifteen countries in the Asia- Pacific region signed the Regional Comprehensive Economic Partnership (RCEP) agreement creating the world’s largest trading bloc.

US

US equities (+10.9%) registered their largest gain since April. Results from Phase 3 trials indicated that a vaccine developed by biotech company Moderna has 94% efficacy, while Pfizer and BioNTech’s vaccine demonstrated 95% efficacy. These encouraging results triggered a rotation from growth and momentum stocks to value and cyclicals. Congress faced mounting pressure to provide an additional fiscal stimulus, as the economy continues to suffer under the weight of the pandemic and as coronavirus-related unemployment benefits for nearly 14 million Americans are set to expire at the end of the year. The number of new COVID-19 cases in the US surged to record highs, prompting states to dial back reopening plans and introduce new restrictions to stem the spread of the virus. Joe Biden was elected president after a closely contested election, removing a key element of uncertainty for the market. Republicans unexpectedly narrowed the Democrats’ majority in the House of Representatives and will retain control of the Senate if they win one of two seats in Georgia’s runoff election on January 5. At the end of November, 95% of companies in the S&P 500 Index had…

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