- US Treasurys were the best-performing fixed-interest segment, while emerging-market debt continued to sustain the deepest losses.
- Lower expectations for next year could allow for upward revisions in analysts’ earnings estimates assuming, as we do, that the renormalisation of global economic growth gets back on track with wider vaccine distribution.
Global equities started November on promising footing. Shares advanced for the first week, then treaded water through mid-month before declining, modestly at first, and then sharply during the last week.
Developed-market shares continued to perform better than emerging markets. China, Hong Kong, the UK and Europe sustained sharp one-month drops. Japan’s losses were less severe, and the slide in US shares was mild compared to other major markets.
Government-bond rates declined across all maturities in the UK and eurozone; yields went negative on eurozone bonds with maturities all the way out to 30 years (negative yields were out to 12 years at the end of October). Short-term US Treasury rates increased, while intermediate-to-long-term rates declined, resulting in a flatter yield curve. Treasurys were the best-performing fixed-interest segment, while emerging-market debt continued to sustain the deepest losses1.
Commodity prices reversed lower in November. The Bloomberg Commodity Index was mostly flat until a selloff during the last week of the month, finishing November down 7.3%. Crude oil prices moved slightly lower throughout the month, and then similarly tumbled to end the month. The West Texas Intermediate crude oil price dropped 20.8% in November, while the price of Brent crude fell by 17.3%2.
Emergence of the omicron coronavirus variant in southern Africa was a key factor in rattling investors as November progressed3. Omicron appears to contain significantly more mutations than other variants, which could potentially make it more effective in sidestepping neutralisation by antibodies generated from earlier infections and vaccinations.
The US reported the highest country-level number of new COVID-19 infections per day at the end of November, followed by Germany, the UK, France and Russia. Daily deaths associated with COVID-19 were highest in Russia, then the US, Ukraine, India and Poland4.
Vaccination drives mirrored share performance in November: the UAE, Cuba and Chile have the highest population shares with at least one dose of vaccine5. The two best-performing country-level equity performances for the month were the UAE and Chile.
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1According to data from FactSet and Lipper. See Fixed-Income Performance chart on page 3.
2According to market data from The Wall Street Journal.
3“Classification of Omicron (B.1.1.529): SARS-CoV-2 Variant of Concern.” World Health Organization. 26 November 2021.
4“COVID-19 Global Tracker.” Reuters.
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