MARKETS IN A NUTSHELL — FOR NOVEMBER 2024

The GOP clean sweep of the US elections and the ensuing Trump Trade dominated global markets in November. US stock markets rallied to their best monthly performance this year on the conclusive elections result. Trump's pro-America, pro-growth stance reignited the theme of American exceptionalism.

The S&P 500 jumped 5.7%, while the Dow Jones climbed over 7%. Financial, technology and energy stocks led the rally on prospects of deregulation and Trump’s promises to boost fracking and exit the Paris Climate Agreement in pursuit of US energy dominance. US economic indicators were also robust — retail sales exceeded expectations and manufacturing activity expanded at a rapid pace.

European and emerging markets — likely to bear the brunt of US tariffs — struggled. The MSCI Emerging Markets Index dropped 3%, with Latin America and China falling most. The Euro Stoxx 50 Index fell 3.2% in US dollars.

Trump’s hardline stance on trade and illegal immigration also raised fears of rising input costs for American producers. For example, automaker General Motors’ share price dropped amid concerns that new tariffs could significantly raise car prices, while major retailers like Walmart warned of price hikes.

The US Federal Reserve also cut rates by a quarter-point in November, but bond markets saw only modest gains. With inflation concerns resurfacing, markets now expect just three more cuts from the Fed over the next year. While inflation has moderated over the past year, the cumulative impact of rising costs since 2020 remains burdensome for US households.

In South Africa, the JSE tracked global bourses lower when measured in US dollars and the rand quickly weakened against the greenback. The resources sector fell heavily again as most commodities — including gold and copper — fell further. The South African Reserve Bank cautiously cut the repo rate by 25 basis points, with high rates still strangling the economy — GDP growth contracted in the third quarter. The bond market traded higher on improved ratings prospects.

The benchmark-agnostic Foord Global Equity Fund lagged on its lower weight to the expensive US stocks that rallied most, with an overweight to the energy sector helping fund returns. The Foord Asia ex-Japan Fund added alpha in the falling market. November was the perfect storm for the Foord International Fund, given its hedge against falling US markets, judicious Chinese exposure and investment in defensive stocks and sectors, which fell in the exuberance.

The Foord South Africa multi-asset funds were flat over the month — with good SA equity selection and rand weakness offsetting poor global fund performance. The Foord Equity Fund again added alpha on its lower resources weight. The more cautiously positioned Foord Bond Fund gained by less than the All Bond Index, as riskier longer dated bonds rallied most.

As we head into 2025, global markets are adjusting to the potential ripple effects of Trump’s policies. With the S&P 500’s price-to-earnings ratio at elevated levels, high US sovereign debt, and limited room for tax cuts, uncertainty looms large. We remain cautious, prioritising investments that balance capital protection and growth, while shielding portfolios from the corrosive effect of inflation.

We wish you a safe and restful holiday season.