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November’s record-breaking month in markets

The month that stunned investors with Donald Trump’s US election victory was a record-breaker in markets. The prospect of big tax cuts and fiscal spending from the incoming administration has stirred the market’s animal spirits, driving Wall Street into record territory, while bond prices have been hit hard by expectations of higher inflation.

Here is how November played out in numbers:

13 — The dollar index — which measures the value of the greenback against a basket of currencies issued by trading partners — rose to its highest level in 13 years. Analysts say the dollar rally has further to run, likening the Trump package of tax cuts and fiscal spending to the 1980s policies of Reaganomics, when the dollar went on such a sustained upward run it prompted co-ordinated action by the world’s central banks to weaken the currency.

56 — The rise, measured in basis points, of the yield on benchmark Treasuries in November, was the most visible sign of a change in direction for the $14tn market for US government debt. The violent move knocked $1.6tn from fixed-income portfolios, as the yield on 10-year debt finished the month at 2.39 per cent, the highest since July 2015. Digesting the campaign promises of the Republican party, some investors concluded that the era of record-low interest rates had come to an end.

1,347 — The all-time high for the Russell 2000 index in a month when the four most-watched stock market indices set records. Composed of US small companies typically worth $300m to $2bn, the Russell index notched the sharpest monthly jump since 2011 for November, with a gain of 11 per cent. Optimism for domestic-focused groups after Mr Trump’s win helped the index far exceed those of the S&P 500, the main large company barometer, which posted a 3.4 per cent increase for the month.

1:1 — A prominent counterpart to dollar strength has been euro weakness, with foreign exchange desks ending the month focused on the possibility of a milestone last seen in 2002. Talk of euro-dollar parity has cropped up before, most recently when the Federal Reserve began to talk about higher interest rates at the beginning of 2015, but it has returned with more conviction this time. As investors contemplate US economic growth, political reverberations have begun to rattle European investors.

611m — The market capitalisation, in euros, of Banca Monte dei Paschi di Siena. The world’s oldest bank is the locus of fears for the Italian financial system, if Matteo Renzi step down should he lose the constitutional referendum on which he has staked his premiership. The bank needs to raise nearly nine times its current valuation in fresh capital from stock market investors as part of a package of measures to address bad loans and avoid a resolution that could threaten another seven of the country’s financial institutions.

Under pressure: Matteo Renzi has staked his premiership on the Italian constitutional referendum © AP

4.5 — The percentage drop in the euro against the pound, its largest monthly fall since 2009. While European political risk attracts attention ahead of the Italian referendum on its voting system, sterling has enjoyed a bout of strength despite continued uncertainty over the implications of Brexit. Analysts have been making upward adjustments to their predictions for the pound, as speculative sellers are forced to retreat, at least for now.

46.89 — The average cost, in dollars, of a barrel of Brent crude oil during November. However, prices were heading much higher on Wednesday as Opec agreed to the first production cut since the 2008 financial crisis. The S&P 500 energy index rallied 4 per cent by midday in New York, its biggest gain in two months, after the cartel’s oil-producing countries struck a long-awaited pact aimed at reducing the glut of supply that prompted a collapse in the price of crude oil that began in 2014.

21.1855 — The amount of Mexican pesos a US dollar could buy on November 11, an all-time record. The dollar-peso exchange rate was a proxy during the presidential election campaign for investors worried about a Trump victory, and the peso duly fell off a cliff as he closed in on a win. The peso has since eased slightly, but as Mexico waits to see which of his protectionist policies the president-elect implements, it remains above 20 to the dollar.

87 — Number of tweets from Donald Trump since becoming president-elect.

Additional reporting by Adam Samson

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