Equity markets continued their recent strong rally to post impressive gains for the month of November. Expectations that global inflation is approaching its peak has given a boost to markets in recent times. The Australian share market improved by 6.6% for the month driven by a strong mining sector which was up 17% on optimism that the China would remove its COVID restrictions. Our market is now up an impressive 14% from its mid-October lows. Healthy gains were also recorded around the world with the US up 5.4 %, Europe and the UK both up 7% and China roared back to life by advancing 22%.
Both the RBA and the US Fed continued to tighten cash rates and run-off balance sheets which can be expected to continue until real rates are at least positive. The more optimistic inflation outlook saw bond markets rally with US 10-year treasury yields falling 38 bp and the Australian 10-year government bond responded similarly by falling 23 bp. The USD weakened sharply over the month reflecting the market’s risk-on mood benefiting the Australian dollar which rallied off its recent lows to approach $US 0.67 by months’ end. Commodity prices were mixed as oil fell 6.3%, gold improved 7.3% while iron ore pushed through $US100 per tonne for the first time since September.