Global equity markets produced strong returns in November, as market participants forecast Central Banks easing interest rates earlier than previously thought. The value of the Australian Dollar rose against all major foreign currencies, decreasing overseas investment returns when measured in Australian dollar terms. Australian and international fixed interest markets posted positive returns reflecting falling bond yields over longer maturities.

The Board of the Reserve Bank of Australia (RBA) met on 7 November to discuss global and domestic economies and markets, and to review their monetary policy settings. The RBA increased the cash rate target by 0.25% to 4.35%, the first hike since June. Whilst discussing their monetary policy decision the minutes stated “… members noted that underlying inflation had been more persistent over the prior few months than had previously been expected. High inflation was being underpinned by above-average price rises for a wide range of consumer goods and services.” and “… housing prices were continuing to rise and loan approvals had increased over prior months, both of which might indicate that financial conditions are not especially restrictive”. On 5 December, whilst not in the timeframe captured by this commentary, the RBA kept the cash rate target unchanged at 4.35%.

The US Federal Reserve (Fed) met to review its monetary policy on 1 November and left its upper cash rate target unchanged at 5.5%. Dovish comments from voting members on the Federal Open Market Committee (FOMC) boosted market sentiment, such as “I am encouraged by what we have learned in the past few weeks—something appears to be giving, and it’s the pace of the economy” by Christopher Waller.

The Prime Minister of Australia, Anthony Albanese, visited China in early November to attend the China International Import Expo. Premier of China, Li Qiang, opened the expo by stating China would like to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Mr Albanese said Mr Li’s comments were “very positive”, but membership to the CPTPP was conditional on China demonstrating it will uphold the authority of the free trade system. This was the first visit to China by an Australian Prime Minister since 2016. 

Equities

Major developed foreign equity markets rose in November, having their strongest month since the COVID-19 vaccine-fueled rebound in November of 2020. Developed markets (excluding Australia) returned 8.0% on a currency-hedged basis (and 4.4% unhedged in Australian dollar terms, reflecting the rise in the value of the Australian dollar). The best performing major foreign equity market was the US stock market (S&P 500 Index) returning 9.1% (in local currency terms) in November. 

The Australian stock market (S&P/ASX 200 Index) comparatively underperformed its global peers, however, was still up 5.0%, with 8 out of 11 industry sectors experiencing positive returns. Both Health Care and Real Estate sectors produced double digit returns of 11.7% and 10.8% respectively. The two worst performing sectors were Energy and Utilities with returns of -7.4% and -6.0% respectively.

From a foreign developed market perspective, 10 out of 11 sectors produced positive returns for the month. The standout performer was Information Technology, returning 13.3%, whilst the sole negative performing sector was Energy, which fell 0.9%.

Bonds

The Australian government bond yield curve flattened in November, with 2-year yields falling (0.35%) and 10-year yields falling further (0.51%) to finish the month at 4.11% and 4.41% respectively. Australian fixed interest returns for November were 3.0% (Bloomberg AusBond Composite Index).

Over November, major developed global government bond yields broadly fell. The Bloomberg Global Aggregate Index (Hedged) was up 3.2%, largely reflecting the decrease in longer term bond yields. Notably the 10-year US government bond yield fell 0.6% from 4.93% to 4.33%.

Currencies

The Australian Dollar rose against all major foreign currencies in November. The Australian Dollar increased by 4.2% against the US Dollar and 1.8% against the Japanese Yen. The Australian Dollar finished the month at 0.6605 US Dollars, up 2.8 US cents over the month.

Commodities

Commodity prices were volatile over the month of November and the S&P GSCI Commodities Index ended the month down 3.7%. The price of WTI oil and Brent oil fell 6.2% and 5.2% respectively. Notably the price of Natural Gas remained highly volatile and fell 21.6% over the month. Of the precious metals, the price of gold rose 2.6% and the price of silver rose 10.6% in November. 

Performance of key markets over relevant time periods to 30 November 2023:

Asset class	Index	Month* (% change)	FYTD* (% change)	Prior 12m* (% change)
Australian Shares	S&P/ASX 200 Acc. Index	5.0%	0.3%	1.5%
International Shares	MSCI World Ex Aust Unhedged A$	4.4%	3.0%	14.4%
International Shares	MSCI World Ex Aust Hedged A$	8.0%	2.1%	11.0%
US Shares	S&P 500 Index	9.1%	3.3%	13.8%
UK Shares	FTSE 100 Index	2.3%	0.7%	2.4%
Japanese Shares	Nikkei 225 Index	8.5%	1.7%	22.3%
Australian Listed Property	S&P/ASX 200 A-REIT Index	11.0%	1.5%	1.1%
Australian Fixed Interest	Bloomberg AusBond Composite Index	3.0%	0.8%	0.2%
Australian Cash	Bloomberg AusBond Bank Bill Index	0.3%	1.8%	3.8%
Currency	AUD/USD	4.2%	-0.9%	-2.7%

*Percentage changes in returns are for periods over the month of November (Month), financial year to 30 November 2023 (FYTD) and the prior 12 months, to 30 November 2023 (Prior 12m). Past performance is not a reliable indicator of future returns.

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