US stock markets start rally
November 2024 was a strong month on the stock markets, especially in the US. Once the uncertainty surrounding the outcome of the US election was over with Donald Trump's clear victory, the US markets were able to make significant gains. However, the European stock markets were unable to keep pace with developments in the USA.
The major US share indices in particular made progress in November. The broad S&P 500 rose by 8.67% and the Nasdaq technology index gained 8.16%. By comparison, growth in Europe and Japan was more subdued. The German share index DAX gained 2.88%, while the broad European share index Stoxx Europe 600 recorded a moderate increase of 0.96%. The Japanese Nikkei index rose by 2.21%. Overall, global equities, as measured by the MSCI World Index, rose by 7.38% - all index figures in euro terms.
The re-election of Donald Trump as President of the USA - and the possible consequences of this - dominated the markets in November. The US stock markets responded favorably to Trump's election victory and performed very well, including small and mid caps. The so-called "Magnificent 7" (large technology companies) and the banking sector performed particularly strongly. However, the US equity markets were also supported by continued solid US economic data, including falling unemployment, increased consumer confidence and a significant rise in purchasing managers' indices: services from 54.9 to 56.0 points and manufacturing from 46.5 to 48.4 points. However, the latter is still below the threshold value of 50, which signals an expansionary economy.
However, some sectors also reacted cautiously to negatively after Trump announced a 25% tariff on all goods from Mexico and Canada and an additional 10% on Chinese imports. As a result, semiconductor stocks fell despite the broad rally. Stocks that are listed in the US but do the lion's share of their business in China also suffered price losses.
Although the European stock markets performed well, they were only able to participate in the broad US rally to a limited extent. On the one hand, this was due to the weakness of the European automotive sector, which fell significantly in the face of meagre demand for e-cars, growing competition from China and the politically motivated phase-out of combustion engines. In addition, the uncertain political situation in France weighed on the local stock market, which also suffered losses.
The war between Russia and Ukraine also briefly became the focus of the markets, as the USA allowed Ukraine to attack targets in Russia with US weapons systems for the first time. This prompted Russia to adjust its nuclear doctrine. The markets subsequently worried about a further escalation of the conflict. Nevertheless, gold was one of the losers against the backdrop of the strong US equity rally. After four positive months, the price of a troy ounce fell by 3.7% and stood at USD 2,643.14 at the end of the month.
Another factor influencing the markets in the medium term was the change in key interest rate expectations in view of rising US inflation to 2.6% (previous month: 2.4%) compared to the same month last year. The markets therefore reduced their expectations of further interest rate cuts. The situation is different in the eurozone, where the markets expect the ECB to cut interest rates further in the near future in view of the continuing economic weakness and a moderate inflation rate of 2.0% (previous month: 1.7%). The bond markets reacted accordingly: 10-year German government bonds yielded 2.10%, 30 basis points lower than in the previous month, while the yield on their US counterparts fell by only 12 basis points to 4.17%.
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