Pictet Group
Weekly house view | Barnier on the brink
The week in review
The S&P 500[i] managed to shake off a threat by president-elect Donald Trump to impose imports on a select number of countries on his first day of office to rise 1.1% (in USD) in a foreshortened week and 5.9% in November as a whole. These gains were outstripped by those of the small-cap Russell 2000[ii], up 11% in November. Equity performance elsewhere was unremarkable, with the Euro Stoxx 600[iii] up 1.1% last month (in euros). While a drop in Treasury yields helped weaken the US dollar last week, emerging markets were under pressure throughout November, with the MSCI EM index[iv] down 3.6% over the month. As in the US, European bond yields dropped last week, with a rise in November inflation not seen as scuttling an ECB rate cut this month. Spreads on French debt over Bunds rose on doubts that France’s government will be able to pass a budget, although some relief came from S&P Global’s decision to leave France’s sovereign rating and outlook unchanged. Japanese bond yields rose throughout November as inflation numbers pointed to a possible rise in policy rates in the coming weeks.
Geopolitics
Israel and Hezbollah have agreed to a ceasefire, albeit fragile. By contrast, Russia’s use of a new ballistic missile to strike Ukraine escalates their conflict.
Key data
The personal consumer expenditure (PCE) index in the US came in an annual rate of 2.3% in October, up from 2.1% in September. Core PCE also rose, to 2.8% from 2.7%. The Conference Board Consumer Confidence Index rose to 111.7 in November, its highest level since July 2023. Euro area consumer inflation rose to an annual 2.3% in November from 2% in October. Core inflation was unchanged at 2.7%. Germany’s Ifo business climate index fell to 85.6 in November from 86.5 the month before. Consumer sentiment indexes for October fell in both Germany and France. The core consumer price index in the Tokyo area rose an annual 2.2% in November, above forecasts and up from 1.8% in October.
[ii] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, Russell 2000 (net 12-month return in USD): 2019, 25.5%; 2020, 20%; 2021, 14.8%; 2022, -20.4%; 2023, 16.9%
[iii] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, STOXX Europe 600 (net 12-month return in EUR): 2019, 27.6%; 2020, -1.5%; 2021, 25.5%; 2022, -10.1%; 2023, 16.5%.
[iv] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, MSCI EM (Emerging Markets) Index (net 12-month return in USD): 2019, 18.9%; 2020, 18.7%; 2021, -2.2%; 2022, -19.7%; 2023, 10.3%.