Market update: 19 November 2024
Global markets experienced a pullback this week as investor optimism following the U.S. election took a pause. In Australia, the ASX 200 ended the week down 0.1%, reflecting a mixed performance. The index started the week lower as China’s latest stimulus measures underwhelmed expectations and declining commodity prices weighed on the market. However, an intraday rebound mid-week followed the release of wage price index data, which showed annual wage growth slowing to 3.5% in the September quarter—the lowest since early last year. This data prompted money markets to push out the timing of the first RBA rate cut to September 2025.
In the U.S., all major indices declined, with the Nasdaq, S&P 500, and Dow Jones falling 3.1%, 2.1%, and 1.2%, respectively. Core inflation remained firm for the third consecutive month, rising 0.3% Month on Month (MoM) and 3.3% Year on Year (YoY), reinforcing the Fed’s cautious stance on rate cuts. Fed Chair Powell noted that the current economic strength allows for a patient approach to monetary policy, with markets now pricing a 58% chance of a December rate cut. Value stocks saw some rotation, with Financials, Energy, and Information Technology sectors gaining momentum.
European equities also ended the week lower as investor expectations for a December Fed rate cut diminished following Powell’s cautious commentary. The Eurozone economy expanded 0.9% YoY in Q3, in line with forecasts, while the UK economy showed signs of cooling faster than anticipated. Despite Thursday’s brief rally, markets gave up gains by the end of the week.
In Asia, Greater China markets faced sharp declines, with the Hang Seng and Shanghai Composite down 6.3% and 3.5%, respectively. Investors reacted to potential U.S. policies on China, compounded by China’s underwhelming efforts to support its property sector. October’s activity data painted a mixed picture, with slower monthly declines in new home prices but steep annual drops. Japan’s Nikkei slipped 2.2% as the Yen weakened to a two-month low against the USD, driven by rising U.S. yields and heightened inflation expectations under Trump administration.
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