Market Briefing: 2nd December

Global stocks fell back a touch last week, but this didn’t take the shine off an excellent month, which saw them rise by just over 5%. The gains over the month were driven by the US and the UK market, with the UK market continuing its good form last week, benefiting from the return of bid activity. The key focus for this week will be Friday’s monthly US jobs numbers, with expectations set high following a poor reading for October.

Last week

• Global stocks had a quiet week but closed out a very strong month of November.
• UK stocks posted decent gains, with bid activity returning to the market.
• Bond markets were positive as yields fell.
• Economic growth data came in strong, with revised US growth numbers confirming the strong trajectory for the economy.

This week

• The key event this week is likely the US monthly jobs numbers (non-farm payrolls) which get released on Friday. Economists (as surveyed by Bloomberg) are expecting 200,000 jobs to have been created in November, following last month’s surprise 12,000 reading!
• Business survey (PMI) data is released this week, with the UK data due out on Wednesday.
• There isn’t much in the way of corporate earnings, but we do have numbers from Salesforce tomorrow, Dollar Tree on Wednesday, DS Smith on Thursday and The Berkeley Group on Friday.

Equity returns are in GBP, Oil is in USD. Gold is shown in GBP. Bond returns are all shown in GBP. Source Bloomberg.

More detail:

• Global share markets had a quiet week (falling back by 0.5%), but their strongest month in over 2 years; rising by 5.2% on the month. The strong gains on the month were driven by a combination of:
  1. Strong US equity gains (with the US market being up 7% in November in GBP terms)
  2. Strong performance of the US Dollar (with the Dollar being up 1.3% vs the Pound over the month)
  3. Strong gains from the UK stock market, with the FTSE All Share being up by 2.5% over the month.
• The US stock market makes up close to 74% of the Global share market, hence it always garners the most attention. The clean sweep victory for President-Elect Trump, with the promise of tax-cuts and de-regulation, paved the way for strong stock performance. Furthermore, the removal of uncertainty (around the election) helped release the pressure valve on the broader stock market, which had been in a holding pattern despite posting strong corporate earnings.
• US corporates posted a 5^th consecutive quarter of positive earnings growth, with a blended growth rate of 5.8%. At a sector level, Consumer Discretionary and Financials both posted much better than expected earnings and this fed through to their performance, with both sectors up by 8.5% and 8.6% on the month respectively.
• UK stocks had a decent week, up by 0.4% and this made for gains on the month of 2.5%. Within the UK market, November saw some strong corporate results from the Banking sector (with this sector rising by 5.2% on the month) and the return of bid activity (which had gone quiet in the run up to the budget). Last week saw Loungers (an AIM listed pubs and restaurants chain) get bought by Fortress Investment Group (a Private Equity Firm) and both Direct Line and Renewi get bid for (by Aviva and Macquarie Asset Management respectively).
• This spurt of bid activity helped drive gains of 1% last week in the FTSE 250, whilst the larger companies within the FTSE 100 were up by just 0.3% last week (making for the 0.4% gain we saw in the FTSE All Share).
• Economic data was pretty strong last week, but bonds yields fell (one would normally expect bond yields to rise with strong data on the expectation of higher interest rates). Much of the fall in bond yields seemed to coincide with President-Elect Trump’s nomination of Scott Bessent (a hedge fund manager), with Bessent seen as having a measured approach to tariffs and prioritizing economic stability. This helped yields rally which saw UK gilts gain 1.1% on the week which took gains to 1.6% for the month of November.
• Economic data last week saw 3^rd Quarter US growth at 2.8%, with the Personal Consumption (which makes up about 2/3rds of US economic growth) coming in at a 3.5% growth rate.
• Additionally, last week also saw the release of US Personal Consumption Expenditure (PCE) inflation data (the Fed’s preferred inflation gauge). It came out bang in line with expectations at 2.3% year-over-year, which did nothing to upset the apple cart!

The value of investments and the income from them can go down as well as up and you could get back less than you invested. Past performance is not a reliable indicator of future performance.

The content of this article is not intended to be or does not constitute investment research as defined by the Financial Conduct Authority. The content should also not be relied upon when making investment decisions, and at no point should the information be treated as specific advice. The article has no regard for the specific investment objectives, financial situation or needs of any specific client, person, or entity.