All major stock exchanges increased over the month by at least 1.5%. United States and Australian stock markets registered the largest gains of 3.6% and 3.3% respectively. The value of the Australian Dollar decreased against all major currencies, and global investment grade credit spreads broadly contracted (i.e. the market’s perceived riskiness of lending to high quality companies decreased).

The United States and China saw minimal progress towards a trade deal during the month of November. Key reasons for the lack of progress are reportedly disputes over farm purchases and the location of the next meeting between Presidents Xi and Trump. The Hong Kong Human Rights and Democracy Act of 2019 was signed into United States law on the 27th of November, despite warnings from China of retaliation and requests to “stop meddling”. The Act lends official support from the US government to Hong Kong citizens demonstrating against China. In addition, the Act requires the United States congress to vote every 12 months that it is satisfied that Hong Kong is not receiving undue influence from mainland China. If the US congress is not satisfied, it may remove special trading privileges and impose sanctions on Hong Kong. Hong Kong citizens continued to protest as the conflict escalated.

Impeachment hearings with respect to President Donald Trump began on the 13th of November, with testimonies having been received from Marie Yovanovitch, a former US Ambassador to the Ukraine, and, Gordon Sondland, US Ambassador to the EU.

The political focus of the United Kingdom is on the upcoming General Election on the 12th of December. London Bridge was the scene of a knife attack in which there were 2 casualties and 3 injuries on the 29th of November. The event shifted the focus of the election somewhat from Brexit and onto reform of the judicial system for convicted criminals. Prime Minister Boris Johnson’s main political message remains “get Brexit done” and a commitment to not selling off the National Health Service (NHS), whilst the leader of the opposition, Jeremy Corbyn, pledges to reduce austerity measures enacted on the British public by the Tory party since 2010.

The Federal Reserve (Fed), the central bank of the United States, continues to receive pressure from President Donald Trump to lower interest rates. The Chairman of the Fed, Jerome Powell, indicated in the minutes of November’s meeting that the Fed is aiming for a “lower for longer” approach, which drove expectations of interest rates downward. The Reserve Bank of Australia (RBA) kept rates on hold at 0.75% in November.

Early in November the International Monetary Fund (IMF) urged European policy makers to plan for a slump in markets, citing the weakening effect of monetary policy and the dangers of implementing protectionism. Subsequently the European Commission reduced its growth outlook for 2020 by 0.4% to 1.1%.

Equities

All major foreign equity markets posted positive returns in November of at least 1.5%. Developed markets returned 3.2% in local currency terms (and 4.7% in Australian dollar terms), whereas emerging markets underperformed relative to developed markets once again, returning 0.6% in local currency terms. The leading performer was the United States’ S&P 500 which returned 3.6% for the month.

The Australian stock market generated a positive 3.3% return during November, with 9 of the 11 sectors contributing positively. Three sectors outperformed strongly in Australia, most notably being Information Technology, which returned 10.9%, followed by Health Care and Consumer Staples, both returning over 8%. The two negative performing sectors were Financials and Utilities.

From a developed market sectoral perspective, all bar one sector generated positive returns. Information Technology and Health Care and were the best performing sectors (for the second consecutive month) with returns each over 5%. Utilities was the only negatively performing sector with a return of -1.6%.

Bonds

The Australian government bond yield curve steepened marginally over November as two-year and ten-year yields decreased by 0.14% and 0.11% respectively. Falling bond yields are positive for short term bond investment returns.

Chinese government bonds were the only major overseas market to experience falling yields, over both two-year and ten-year maturities. Bond yields in the United States, United Kingdom, Europe and Japan all rose over the month.

Currencies

The Australian dollar weakened against all major currencies by at least 0.5% over the month, due to falling Australian yields. The Australian dollar fell by roughly 1.9% against the United States Dollar, British Pound and Chinese Renminbi.

The Australian Dollar finished the month at 0.6763 US Dollars.

Commodities

The price of WTI crude oil increased 1.8% during November whilst Brent crude oil increased twice as much by 3.7%. Industrial metal prices decreased 3.1% on average, with aluminium the best performer and iron ore and coal falling. In precious metals, both gold and silver saw negative returns of 3.2% and 5.9% respectively for the month. Notably natural gas declined 13.4% during November.

Performance of key markets:

Asset class	Index	Month (% change)	FYTD (% change)	1 year (% change)
Australian Shares	S&P/ASX 200 Acc. Index	3.3	5.3	26.0
International Shares	MSCI World Ex Aust Unhedged A$	4.7	10.1	23.6
International Shares	MSCI World Ex Aust Hedged A$	3.2	6.5	13.6
US Shares	S&P 500 Index	3.6	7.7	16.1
UK Shares	FTSE 100 Index	1.8	0.9	10.2
Japanese Shares	Nikkei 225 Index	1.6	10.4	6.5
Australian Listed Property	S&P/ASX 200 A-REIT Index	2.3	4.6	27.0
Australian Fixed Interest	Bloomberg AusBond Composite Index	0.8	2.3	10.7
Australian Cash	Bloomberg AusBond Bank Bill Index	0.1	0.5	1.6
Currency	AUD/USD	-1.9	-3.7	-7.4

Returns are for periods to 30 November 2019. Past performance is not an indication of future performance.