November was a mixed month for global risk assets. Developed market equities were mostly higher, while emerging market equities were mostly lower, the US Dollar strengthened, commodities weakened, credit spreads widened, and US interest rates increased. Concerns over global economic weakness faded as the terrorist attacks in Paris and ensuing reaction dominated news headlines. The Federal Reserve FOMC did not meet in November, though Chairwoman Yellen indicated in Congressional testimony that a December rate hike was “a live possibility” given that the US economy was “pretty strong and growing at a solid pace”. The US job report showed 271,000 jobs were added in October, while the unemployment rate fell to 5.0% and the labor force participation rate remained at 62.4%, a four decade low.
Notable corporate transactions announced in November included the $23.4 billion acquisition of Visa Europe by Visa, Shire’s $5.9 billion purchase of Dyax, Activision Blizzard’s $5.9 billion acquisition of King Digital Entertainment, Expedia’s $3.9 billion purchase of HomeAway., Alibaba’s $4.2 billion acquisition of Youku Tudou, Plum Creek Timber’s $20 billion merger with Weyerhauser, Molson Coors’ $10 billion purchase of the remaining stake in the MillerCoors joint venture, Marriot’s $12.2 billion acquisition of Starwood Hotels, Liberty Global’s $5.3 billion acquisition of Cable & Wireless Communications, Urban Outfitters’ purchase of Pizzeria Vetri, Air Liquide’s $10.3 billion acquisition of Airgas, and Pfizer’s $155 billion merger with Allergan.
Developed market equity markets were mixed in November (see page 8) as Germany (+4.6%), France (+1.5%), and Japan (+1.1%) saw the biggest gains, while Hong Kong (-3.1%), Australia (-0.7%), and Canada (-0.3%) saw the biggest losses. US small caps outperformed, with the Russell 2000 up 3.3% and the S&P500 up 0.3% (see page 2). Financials (+1.9%), Industrials (+0.9%), and IT (+0.9%) were the best performing sectors in November, while Utilities (-2.1%), Telecom (-1.3%), and Consumer Staples (-1.1%) were the worst performing (see page 2). Large cap growth (+0.3%) slightly underperformed large cap value (+0.4%) in November (see page 3). Emerging Market equities were mixed in November (see page 9), with the biggest gains in Russia (+3.4%), Malaysia (+0.6%), and Indonesia (+0.3%); Argentina (-9.9%), China (-3.4%), and the Philippines (-2.9%) were the worst performing.
In currencies, the USD Index strengthened 3.3% in November (see page 10). The weakest developed market currencies against the USD were the Euro (-4%), Swiss Franc (-4%), and New Zealand Dollar (-2.9%), while the Australian Dollar (+1.2%) strengthened against the USD. The USD was stronger against most emerging market currencies with the biggest gains seen against the South African Rand (-4.3%), Russian Ruble (-3.5%), and Indian Rupee (-1.6%); the Malaysian Ringgit (+1%) and Turkish Lira (+0.1%) strengthened against the USD (see page 10).
US Treasury yields rose in November (see page 12) across the curve. 10 year rates closed the month at 2.21%, up from 2.14% at October month end. Investment grade and high yield credit spreads widened in November (see page 13).
In commodities, the GSCI index was down 9% in November (see page 11), with losses in Energy (-11.1%), Livestock (-8.4%), Precious Metals (-7.1%), Industrial Metals (-6.9%), and Agriculture (-3.9%). Within individual commodities, Sugar (+2.8%) and Cocoa (+2.1%) moved higher, while Palladium (-19.9%), Platinum (-15.8%), and Crude Oil (-13.1%) saw the biggest losses; Gold was down 6.7%.
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