Historic: DAX with third-highest November return since 1959

The bi-weekly Monitor gives you a structured overview of the current capital market environment and highlights important developments.

Current market commentary

November is considered one of the seasonally stronger months for equities and has proven this to an impressive extent this year. Several global share indices rose sharply – with the exception of Chinese shares. The combination of falling interest rates and falling volatility coupled with hope of a "Goldilocks" scenario was responsible for the price fireworks. Beneath the surface, there were strong rotations. Small caps and cyclicals outperformed, while interest rate-sensitive stocks with unhealthy balance sheets were among the relative winners. From here, we would expect a consolidation or at most a creeping up of the markets. This is supported by the fact that many shares are overbought, private investor sentiment is euphoric and the positioning of systematic and fundamental strategies has increased significantly. In addition, there is likely to be more rebalancing towards the end of the year – and following the strong outperformance of equities, these are likely to tend to be reduced at the expense of bonds.

Short-term outlook

The next two weeks will be dominated by the global central banks. The Fed will hold its monthly meetings on 13 December and the ECB and BoE on 14 December. The market is currently pricing in a further interest rate hike by one of the central banks as highly unlikely with a strong consensus. The Australian central bank will also announce its interest rate decision on 5 December and the Canadian central bank on 6 December. On the political stage, the Euro Group will meet on 7/8 December to decide on the EU budget. The EU Leaders Summit will also take place on 14/15 December. The Service Purchasing Managers' Indices (Nov.) for Europe, China and the US are due on Tuesday. On Wednesday, the ADP employment figures (Nov.) and the trade balance (Oct.), and on Friday the US unemployment rate (Nov.), hourly wages (Nov.) and non-farm payrolls (Nov.) for the US should provide more insight into the robustness of the US economy.

Historic: DAX with third-highest November return since 1959

Source: Bloomberg, Time period: 30/10/1959 – 30/11/2023
  • German equities gained almost 10% in November, recording their best November return since 1962, excluding the extraordinary coronavirus year 2020.
  • This was supported by the extremely negative investor sentiment towards Europe and Germany in particular at the end of October. This, coupled with falling interest rates, fewer negative economic surprises, rebalancing and the attractive valuation, helped.
  • The euro also benefited from this and gained against the USD.