Global Asset Allocation Team Market Update – November 2024

Global equity markets pushed lower in October, with the MSCI All Country World declining -2.3%. The S&P 500 (-1.0%) ended its five month winning streak amid disappointing earnings results from tech giants that fueled concern the AI frenzy that has powered the bull market has gone too far. The S&P/TSX (+0.7%) bucked the global trend and eked out a modest gain thanks to outperformance in the heavyweight resource space. Elsewhere, the MSCI EAFE (-5.5%) tumbled by the most in a year – while the MSCI gauge of emerging market stocks (-4.4%) slid lower on the back of surging treasury yields, a stronger dollar, mounting election risks, and an underwhelming stimulus package from China.

Fixed income markets posted their biggest monthly loss in two years as positive economic surprises in the United States prompted traders to dial back their bets on aggressive rate cuts by the Federal Reserve. The re-emergence of the so-called “Trump trade” also contributed to the selloff as speculation mounted that former President Trump will win the election and implement inflationary policies. That saw treasury yields back up sharply across the curve, with the 10-year yield soaring 50 basis points to 4.28% – while the 2-year yield rose by 53 basis points to 4.17%. For the month, the Bloomberg US Aggregate Bond Index fell -2.5%, while the FTSE Canada Bond Universe shed -1.0%.

The US dollar (+3.2%) strengthened in its best monthly gain in two years. The greenback was stronger versus all of its Group-of-10 peers, with the euro (-2.3%), pound (-3.6%), yen (-5.8%), and Canadian dollar (-2.9%) all losing ground last month.

Finally, oil (+1.6%) inched higher as traders contemplated lingering tensions in the Middle East that risks disrupting supplies. Gold (+4.3%) hit a fresh high on haven demand ahead of the US election and amid hostilities in the Middle East. Copper (-4.7%) retreated after China’s steps to support the economy fell short of expectations and dampened demand prospects from the top consumer of the red metal.

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