Monthly Market Review - November 2024
Markets rose in November, driven by greater clarity on US economic policy post-elections. The MSCI World Islamic Index gained 4.0% in November lifting its YTD gain to 7.6%, whereas the Dow Jones Sukuk Index remained flat, with a modest gain of 0.3% in November, pushing its YTD return to 4.0%1.
US elections in November saw Republicans secure majorities in both houses and the presidency. Markets reacted by pricing in "Trump trades" amid expectations of policy changes. The US dollar strengthened as the incoming administration focused on bolstering the local economy and yields rose on expectations of higher debt issuance. The markets are now pricing in three rate cuts by the end of 2025. The dollar index rose by 2.9% MoM1. Gold, on the other hand, fell by 3.1% due to rising yields and a stronger dollar1.
In the UK, tax hikes raised fears of job losses and reduced investment, exacerbated by inflation pressures from rate cuts and rising wages5. US tariffs may further strain the market. The PMI stood at 48.6, reflecting weak manufacturing activity.
The Eurozone faces challenges from weak domestic demand, U.S. trade restrictions, and high borrowing costs, with French markets hit by political unrest3. Industrial production has declined steadily since early 2023, driven by high energy costs, weak demand from China, and tight fiscal policies, though consumer goods output is showing signs of recovery. Growth is now centered on the services sector, where inflation remains a concern, while goods prices stay flat.
On the global front, China saw initial market gains in November, but anticipation of tariffs later weighed on performance4. The manufacturing index rose slightly to 50.3, signaling marginal growth amid lingering economic concerns1. The markets are expecting the PBOC to ease the economy with rate cuts to aid the growth considering the incoming tariffs2.
Looking ahead, markets are expected to remain highly responsive to central bank policies and geopolitical events, especially concerning inflation control and stimulus efforts. With the US dollar strengthening, diversification will be crucial to managing potential market shifts and uncertainties in the months ahead.
References:
- Bloomberg
- Bloomberg News. (2024, 12 02). Bloomberg. Retrieved from China 10Y yield Sinks to Record Low on Bets PBOC will ease: https://www.bloomberg.com/news/articles/2024-12-02/china-s-10-year-yield-is-heading-toward-record-2-on-easing-bets?embedded-checkout=true
- Elliyatt, H. (2024, November 28). France’s political chaos drives borrowing costs to the same level as Greece’s for the first time. Retrieved from CNBC: https://www.cnbc.com/2024/11/28/frances-political-chaos-drives-borrowing-costs-to-same-level-as-greeces.html
- Vivek, M., & Kevin, Y. (2024, November 20). Trump to unleash nearly 40% tariffs on China in early 2025, hitting growth: Reuters poll. Retrieved from Reuter: https://www.reuters.com/markets/asia/trump-unleash-nearly-40-tariffs-china-early-2025-hitting-growth-2024-11-20/
- Weardon, G. (2024, December 1). UK business confidence at lowest level since pandemic after tax-raising budget. Retrieved from The Guardian: https://www.theguardian.com/business/2024/dec/01/uk-business-confidence-at-lowest-level-since-pandemic-after-tax-raising-budget
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As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. The tax treatment of your investment will depend on your individual circumstances and may change in the future. If you are unsure about whether investing is right for you, please seek expert financial advice.
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