Buoyed by the positive sentiment created by the surprise Presidential victory of Donald Trump, equity markets in North America and Asia recorded strong gains in November with the US up by 3.7%, Australia up 3%, Japan 5.5% higher on the back of a weaker Yen, and China advancing a healthy 5.8%. European markets fared worse, led by the UK which was down 2% due to uncertainty over its withdrawal from the EU, while continental markets were subdued due to concerns about the rise of populist movements across Europe.
Predictions for a stronger US growth outlook ignited commodities markets especially industrial base metals with copper, lead and zinc all up in excess of 20% while iron ore rose a healthy 19%. Global sovereign bonds were the big loser for the month as investors rotated out of bonds into stocks fearing a rise in inflation and an accelerated tightening program by the US Fed. US 10 year bond yields rose 45bp for the month and Australian 10 year bonds followed in lock step rising 35bp to close the month at 2.7% producing a negative return of 1.44% for the month. Australian 10 year bond yields are now almost a full 1% higher than 3 months ago. The $US surged over the month especially against the Yen and Euro while the $A couldn’t keep pace with the rampaging greenback, declining by 2.9%.