News & Insights

November 2024 – Market Update

By James Timpson

5 Nov 2024

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Global markets were jittery in October as the speculation over interest rate cuts and their impact on economic growth and inflation rumbled on.

Uncertainty has also been building ahead of this week’s US presidential election, which has proven considerably more difficult to call compared to the UK’s general election earlier in the year. By the end of the month the VIX index, which tracks implied volatility in the US equity market, reached its second highest level since March last year, surpassed only by the market ‘flash crash; seen in August this year.

In the UK, inflation measured by the Consumer Prices Index fell by more than expected to 1.7%, its lowest level in over three years. Chancellor Rachel Reeves delivered Labour’s first Budget since 2010, in which she unveiled £40 billion in tax rises from next year. The Budget also included the latest economic forecasts from the Office for Budget Responsibility (OBR), which predicts UK real GDP growth of 1.1% this year, 2.0% next year and 1.8% in 2026, before falling back to around 1.5% thereafter. The initial market response to the Budget was uneasy, with the FTSE 100 index falling 1.33% in two days and the 10 year gilt yield rising to its highest level in nearly a year.

Full round-up of October market performance

In the UK, the FTSE 100 index slipped 1.45% while medium and smaller companies, measured by the FTSE 250 ex IT index and the FTSE Small Cap ex IT index respectively, declined 3.23% and 0.98%. In the US, the S&P 500 USD index lost 0.91% while in Europe the Eurostoxx 50 EUR index shed 4.59%. Japanese stocks measured by the Topix JPY index gained 1.88%.

Emerging markets returns were mostly negative, with the MSCI Emerging Markets index dropping 2.75% in local currency terms. Latin American equities, measured by the MSCI Latin America local currency index, fell 0.91% while Indian stocks measured by the Nifty 50 INR index slumped 6.22%. Chinese stocks measured by the MSCI China CNY index sank 5.60%.

In the fixed income market, UK government bonds, measured by the FTSE Gilts All Stocks index, decreased 2.48% with long-dated (over 15 years to maturity) gilts sliding to 4.44%. Sterling denominated corporate bonds, measured by the Markit iBoxx Sterling Corporates index, declined 1.13%. In the high yield market, the ICE Bank of America Sterling High Yield index rose 0.59%.

In the commodities market, the S&P GSCI USD index, which consists of a basket of commodities including oil, metals and agricultural items, picked up 0.46%. Brent crude oil futures gained 1.60% during the month. In the precious metals markets, the S&P GSCI Gold and Silver indices amassed 3.79% and 4.66% in USD respectively, while in the agricultural markets corn and wheat futures conceded 3.30% and 2.31% in USD respectively.

In the currency markets, it was a mixed month for the pound as it depreciated 3.56% versus the US dollar and 1.33% against the euro but rose 2.09% versus the Japanese yen.

James Timpson CFA Head of Asset Management

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