Monthly Market Report – November 2024
Donald Trump emerged victorious in the November 5 elections, also securing Republican control of Congress and the Senate. The foreseeable decisions of the future president set the tone for the markets throughout the month; stocks, bonds, and the USD reached significant levels in November.
Wall Street resumed its upward trend seen throughout the year, achieving new all-time highs. The S&P-500 index surpassed 6,000 points, posting a +5.73% gain in November. The market expressed strong optimism about the impact of Trump's victory on future profit generation for U.S. companies.
The dollar also reacted strongly to the election results. The U.S. currency appreciated sharply as fewer rate cuts by the Fed were anticipated under the Trump administration. The EUR/USD exchange rate hit its annual low at 1.0335.
Regarding monetary policy, the Fed cut rates for the second time this year, as the market had anticipated. The reference rate dropped to 4.75% from the previous 5.00%. Expectations for future rate cuts have significantly moderated since the elections:
- Concerns about an aggressive tariff policy increasing inflation.
- Projections of higher economic growth and stable employment weaken the case for the Fed to ease monetary policy further.
Geopolitical issues were particularly relevant in November, with several global fronts open:
- Germany is heading toward early elections in February due to internal conflicts within the current coalition government.
- Tensions between Ukraine and Russia reignited. Zelensky ordered missile strikes on Russian soil, and Putin responded with a nuclear-capable intercontinental ballistic missile.
- France faced a political crisis that prevents the approval of budgets for the next fiscal year.
- In the Middle East, a temporary 60-day truce between Israel and Hezbollah helped stabilize oil prices, which neared annual lows.
The gap between U.S. and European stock markets continues to widen in 2024; the MSCI USA index closed November with a cumulative return of +26.77%, while its European counterpart achieved only +6.32%. This past month, indices such as the S&P-500 gained +5.73%, while the Eurostoxx-50 fell by -0.48%.
NVIDIA, one of the three largest-capitalization companies in the world, reported results on November 20. The earnings figures exceeded estimates, although forecasts for the last quarter and next fiscal year fell slightly short, limiting Wall Street's gains.
Another market particularly sensitive to Trump's victory was fixed income. Sales of U.S. public bonds accelerated. The 10-year yield traded near 4.45%, with a price drop of -6.55%. During the last week of the month, declines partially recovered.
Trump appointed Scott Bessent as the new Secretary of the Treasury, which was well-received by the market. Bessent emphasized his commitment to containing the deficit, and the 10-year U.S. yield closed the month at 4.17%.
