Introduction

November 2023 marked a significant shift in global market tone as investors embraced the growing likelihood of a central bank pause - and eventual easing - in 2024. Declining inflation prints, softening economic data, and dovish commentary from monetary authorities led to a powerful rebound across equities, bonds, and risk assets. Volatility subsided, the U.S. dollar weakened, and long-duration assets saw renewed investor interest. Optimism around a potential soft landing returned to the forefront.

United States

U.S. markets surged in November. The S&P 500 jumped 8.9% - its best monthly performance since July 2022 - while the Nasdaq Composite gained 10.7%, led by technology, financials, and consumer discretionary sectors. Bond yields fell sharply, with the 10-year Treasury yield retreating from a peak of 4.84% in October to 4.33% by month-end.

The catalyst was a weaker-than-expected October CPI report, which showed headline inflation slowing to 3.2% year-on-year and core inflation easing to 4.0%. This led markets to price out additional Fed rate hikes and begin anticipating rate cuts in the first half of 2024. Fed officials maintained cautious language, but acknowledged that policy was now “well into restrictive territory.”

Europe

European equities rallied alongside global peers. The Euro Stoxx 50 climbed 6.4%, buoyed by falling bond yields and signs of inflation moderation. Germany's DAX and France's CAC 40 outperformed, supported by recovering sentiment and earnings resilience.

Eurozone inflation fell sharply in November, with headline CPI dropping to 2.4% - its lowest level since mid-2021 - and core inflation easing to 3.6%. The European Central Bank left interest rates unchanged, and while President Christine Lagarde maintained a hawkish tone, markets increasingly priced in cuts by mid-2024 as growth continued to weaken across the bloc.

Asia-Pacific

Asian markets participated in the global rebound. Japan's Nikkei 225 rose 8.5% as global risk appetite returned and the yen strengthened modestly. The Bank of Japan remained accommodative, with policymakers signalling that ultra-loose policy would persist into 2024, despite growing speculation of future adjustments.

In China, the Hang Seng Index rose 4.5%, while the Shanghai Composite gained 2.8%, despite continued economic headwinds. Stimulus announcements targeted at housing, infrastructure, and local government debt helped boost sentiment, though confidence remained fragile. Australia's ASX 200 advanced 4.5%, tracking global equity strength and falling bond yields.

Emerging Markets

Emerging markets saw renewed inflows in November as dollar weakness and falling global yields lifted risk assets. The MSCI Emerging Markets Index rose 6.7%, with strong performance in Latin America, India, and Southeast Asia.

India's Nifty 50 hit new record highs, driven by robust GDP growth, corporate earnings, and foreign institutional inflows. Brazil and Mexico also rallied, supported by easing inflation and clearer monetary policy paths. Meanwhile, Turkey's central bank delivered another large rate hike, helping to stabilise the lira.

Commodities

Oil prices declined during November, with Brent crude falling from around USD 87 to USD 81/barrel amid concerns about oversupply and softening global demand. An OPEC+ meeting was delayed, adding to uncertainty around production cuts for early 2024.

Gold rallied strongly, ending the month near USD 2,040/oz, supported by falling real yields and increased demand for inflation protection. Copper and industrial metals also gained on improved sentiment and renewed optimism around Chinese stimulus measures.

Fixed Income & Currencies

Bond markets staged a powerful rally. The U.S. 10-year Treasury yield declined by over 50 basis points during the month, its largest monthly drop since 2008. Yields across Europe and Asia also fell sharply as investors repositioned for easing cycles in 2024.

The U.S. dollar weakened against most major currencies. The euro, yen, and pound all gained, while emerging market currencies rebounded. The Singapore dollar appreciated modestly as inflation continued to cool and the MAS maintained its currency-based policy stance.

Outlook

November was a turning point in market sentiment, as investors embraced the possibility of a soft landing and easing policy conditions in 2024. The focus now shifts to labour market resilience, the durability of disinflation, and corporate earnings as key drivers of near-term direction.

Brightness Capital & Asset Advisory maintains a balanced risk posture with increased exposure to high-quality growth and income-generating assets. We remain constructive on U.S. and Indian equities, cautiously optimistic on EM debt, and continue to monitor credit spreads, monetary policy signals, and geopolitical developments as we approach year-end positioning.