November 2018 Market Commentary

December 4, 2018

By Jan Faure

Markets remained on edge during November with most indices once again experiencing elevated levels of volatility. Most major indices dropped to year-to-date lows before rebounding in the final week of November.

Investors again fretted over rising US interest rates, slowing global economic growth, and of course the US – China trade war.

The big news story for November played out over the opening weekend for December. Markets waited in anticipation for the outcome of a meeting between US President Donald Trump and Chinese President Xi Jinping at the G-20 summit in Buenos Aires. Following a weekend dinner between the two leaders, the US and China declared a cease-fire in their trade war. The US had been scheduled to push ahead on January 1 with increased tariffs on $200 billion worth of Chinese goods. Any new action has been postponed for three months, allowing the two sides time to negotiate a more permanent resolution to the trade dispute.

Global markets rallied on the news, although focus will quickly turn to how the two nations will bridge the deep divide on trade and other issues. Those issues include forced technology transfer by US companies doing business in China; intellectual property protection that the US wants China to strengthen; non-tariff barriers that impede US access to Chinese markets; and cyberespionage.

Oil prices entered a bear market in November. No sooner had markets been predicting oil prices back at $100 a barrel than prices collapsed. Oil dropped by 22% MoM in November – its biggest monthly loss in a decade. From October’s high of $86/bl, Brent Crude has fallen approximately 30% on concerns of a surplus in global supply.

Finally, investors speak annually about the “Christmas Rally”. It is driven by nothing more than an optimistic “vibe” that sweeps through markets as the year-end (and holidays) approach.

Over the last 100 years, the Dow has averaged a gain of 1.55% in December, with gains 74% of the time. Investors will be hoping for a repeat of history. Besides US markets eking out meagre returns so far for 2018, as it stands virtually all major markets will be happy to see the back of 2018.

GLOBAL INDICATORS: Local reporting currencies

Source: Bloomberg,, S&P Dow Jones Indices
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