Market Update November 2020

Global equity markets experienced exceptionally strong returns in November as positive vaccine news and the US election outcome produced a market positive environment.

The value of the Australian Dollar increased against major currencies, somewhat diminishing the returns of overseas investments when measured in Australian dollar terms. Global investment grade credit spreads contracted over the month (i.e. the market’s perceived risk of lending to high quality companies decreased).

The world’s largest free trade agreement, the Regional Comprehensive Economic Partnership (RCEP), was signed on 15 November by Australia and 14 other Indo-Pacific countries including China, Japan, New Zealand and Indonesia. The trade deal encompasses 2.3 billion people and a combined GDP of US$26.3 trillion (approximately 30% of the global population, global trade, and world GDP). Although India is yet to join the trade agreement, the door remains open for them. RCEP expands upon former arrangements between ASEAN countries that covered trade in goods and services to also cover areas such as intellectual property, electronic commerce, and small and medium enterprises, among other areas.

The United States held their general election on 4 November (Australian time) encompassing the highly publicized presidential race between incumbent President Donald Trump and former vice-president Joe Biden, all House seats, and one third of the Senate seats (along with 11 state governorships). Early in the vote counting process it was clear that the result would be closer than the pre-election polling indicated and after a couple of days the states of Arizona, Nevada, North Carolina, Georgia and Pennsylvania were open to swinging in either direction. As more mail in ballots were counted it became clear that Joe Biden would win the electoral college race as he secured a record of more than 80 million votes in total. President Trump and his Republican colleagues claim that many of these mail in ballots were either fraudulent or disqualified, and court cases against the voting and counting process continue to be filed. At this stage it is expected that Joe Biden will be sworn in on 20 January 2021. The Democrats retained control of the House, although their margin narrowed. The race for the Senate is still ongoing with two seats in Georgia heading to run-off elections on 6 January, which will determine the outcome of the Senate. Republicans hold 50 seats whereas the Democrats (combined with Independents) hold 48 seats. It is reportedly unlikely that the Democrats will win both Senate seats in Georgia to split the Senate 50:50 and give the Democrats an edge with Democratic vice-president Kamala Harris deciding any tied votes. This may severely limit Biden’s ability to repeal major policy set by the Trump administration and enact his own agenda.

Negotiations between the United Kingdom and the European Union (EU) over Brexit and related trade issues were ongoing throughout the month of November. At times there were positive signals that a deal may be reached, however in mid-November talks stalled when key members of the EU’s negotiating team tested positive for COVID-19. Many sources report a deal is “95% of the way there” [1], however there remain large unresolved issues around fishing rights, trade standards and protecting fair competition, and how to police situations if either side fails to meet the requirements set out in the deal. The European parliament have added an extraordinary sitting to their schedule on 28 December as a last chance to pass a deal. There is also speculation that the EU may pass a deal provisionally and then have a formal vote after enough time to review the details in 2021. The timeline for agreeing to a deal is becoming extremely tight as once reached it needs to be translated into over 20 languages, reviewed by lawyers and agreed to by the EU Commission (on behalf of its 27 members) and the UK government. If no deal is reached, the UK and EU will be trading on WTO rules with each other from the beginning of 2021.


Reported global coronavirus case numbers exceeded 63.4 million at the end of November, with a total of over 1.4 million fatalities [2]. Daily reported cases of infections surged once again in November and surpassed 660,000 on a global basis at its peak. The United States and the majority of Western Europe saw infections increase to record levels in November and then tentative reductions towards the end of the month. Incoming President-elect Biden will not be able to enforce country wide lockdown measures, which are the remit of State Governors, but has stated he will seek a mask mandate. Western European lockdown measures to combat the spike in cases are expected to end in December.

Very promising Stage 3 testing results were published for three of the major vaccine contenders in November. Pfizer, in partnership with BioNTech, announced on 10 November that their vaccine had a 90% effectiveness rate, significantly higher than what most experts predicted. Approximately a week later, Moderna (which developed a similar drug to Pfizer that uses mRNA technology), announced their results which had approximately 95% effectiveness for the vaccine. Around one week after that, AstraZeneca (in conjunction with Oxford University), announced that their Stage 3 trials had shown their vaccine was 70% effective. Importantly, AstraZeneca’s vaccine is a viral vector vaccine which does not require extremely cold transport and delivery, giving it a distinct implementation advantage in some locations. It is expected some vaccines will receive approval from various governments in December with large scale distribution beginning soon thereafter.

Australia saw one death due to COVID-19 during November, and daily infection cases were in the single or low double digits. Victoria took its last step towards reopening from midnight on 22 November, as set out by the Premier Daniel Andrews. Travelling distance limits from home have been dropped, and all forms of sport can resume. Shops, recreational facilities, entertainment, hospitality and cultural venues have opened. South Australia saw a spike in infections, however this was on a relatively small scale compared to Australia’s previous spikes.


Foreign equity markets increased substantially throughout November. Developed markets (excluding Australia) returned 11.6% on a currency-hedged basis (and 7.4% in Australian dollar terms), outperforming emerging markets which returned 7.8% in local currency terms. The best international performer was the EURO STOXX 50 Index which returned 18.1% for the month.

The Australian stock market (ASX 200) generated a return of 10.2% during November, with 10 out of 11 sectors contributing positive returns. Energy, Financials and Real Estate were the standout performers returning 28.4%, 15.2% and 13.6% respectively. Consumer Staples was the sole negatively performing sector returning -0.7%.

From a developed market sectoral perspective, all 11 sectors produced positive returns. Energy was the top performing sector returning 27.1%, followed by Financials returning 17.9% and then Industrials returning 14.7%. The sector that performed the worst was Utilities and still managed a return of 4.3%.


The Australian government bond yield curve continued to steepen throughout November with the two-year yield decreasing by 0.021% and the ten-year yield increasing by 0.068%. The cash rate set by the RBA reduced by 0.15% (from 0.25% to 0.1%) on 3 November.

Major developed global government bond yields produced mixed results over two-year and ten-year terms. Over ten-year terms the United States government bond yield decreased the most by 0.035%. When considering two-year terms, the European government bond increased the most by 0.051%.


The Australian dollar strengthened against all major currencies due to a higher appetite for risk (risk-on sentiment). The AUD increased by 4.5%, 4.1% and 3.6% against the United States Dollar, Japanese Yen, and Swiss Franc respectively.

The Australian Dollar finished the month at 0.7344 US Dollars, up 3.2 US cents over the month.


WTI oil rose 26.7% and the price of Brent crude oil increased 27.0% over the month due to increased global demand forecasts. The S&P GSCI Industrial Metals index increased 13.2% on average, with copper being a strong performer which rose 12.2%. Regarding precious metals, the price of gold decreased 5.4% and the price of silver decreased by 4.3% for the month of November.

Performance of key markets to 30 November 2020

Asset class Index Month* (% change) FYTD* (% change) 1 year* (% change)
Australian Shares S&P/ASX 200 Acc. Index 10.2% 11.8% -2.0%
International Shares MSCI World Ex Aust Unhedged A$ 7.4% 10.2% 5.3%
International Shares MSCI World Ex Aust Hedged A$ 11.6% 14.9% 9.3%
US Shares S&P 500 Index 10.9% 17.6% 17.5%
UK Shares FTSE 100 Index 12.7% 3.0% -12.0%
Japanese Shares Nikkei 225 Index 15.1% 19.4% 15.7%
Australian Listed Property S&P/ASX 200 A-REIT Index 13.2% 20.7% -9.2%
Australian Fixed Interest Bloomberg AusBond Composite Index -0.1% 1.2% 3.0%
Australian Cash Bloomberg AusBond Bank Bill Index 0.0% 0.0% 0.4%
Currency AUD/USD 4.5% 6.4% 8.6%

*Percentage change in returns are for periods over the month of November (Month) or for the financial year I July to 30 November 2020 (FYTD) or for the year 29 November 2019 to 30 November 2020 (1 year). Past performance is not an indication of future performance.