November was a great month for both equity and bond prices, with economic data and signs of increased consumer confidence pushing higher returns. Markets anticipate lower interest rates next year in response to slowing inflation, which is giving stock markets a boost. The S&P 500 returned over 9%, breaking a 3-month streak of declines, whilst UK and European markets also saw positive returns.
A closer look at returns in the States shows returns are largely being driven by a buoyant tech sector with a collection of shares known as the ‘Magnificent Seven’ doing most of the heavy lifting – these include Apple, Microsoft, Nvidia and Tesla. These 7 stocks now represent about 30% of the S&P 500 which is causing concentration risk concern amongst some professional investors.
Traders are increasing their bets on interest rate drops in the UK happening in the middle of 2024, with a small fall in GDP between September and October 2023 adding to the pressure on the BOE’s strong anti-inflation stance.
