Global equities slowed in November after strong gains earlier in the year. The 43-day US government shutdown ended mid-month, but uncertainty over economic growth and monetary policy weighed on sentiment. Developed markets rose only 0.3% despite solid earnings and hopes for a December Fed rate cut. US indices reflected rotation: the S&P 500 gained about 0.25% while the Nasdaq fell 1.45%. Consumer confidence dropped to 88.7, it’s lowest since April, and softer labor data reinforced expectations for easier policy. Probabilities for a December cut, tracked by FedWatch, climbed into the mid 80% range.
Technology was the weakest sector despite NVIDIA’s stellar Q3 results. Growth stocks fell 1.3%, underperforming value by 3.5%. NVIDIA posted record revenue and Q4 guidance but concerns about AI-driven valuations persisted. The S&P 500 Information Technology sector slid roughly 4.8% for the month, while defensive sectors like healthcare surged over 9%. Rotation away from mega-cap growth was evident as investors favored stability amid policy uncertainty.
Emerging markets lagged developed peers by about 2.7%, pressured by losses in tech-heavy Korea and Taiwan. EM equities fell roughly 2.4% versus the relatively flat developed market returns. Profit-taking in large-cap tech and modest improvement in market breadth, with equal-weighted indices outperforming, highlighted skepticism toward concentrated leadership.
Global bonds returned about 0.2% as falling yields and weaker data provided support. The 10-year Treasury yield eased toward 4.0% after ADP reported a 32,000 job loss and confidence fell sharply. Rate-cut odds surged, but supply concerns and term premium fears limited gains. Disinflation trends and policy expectations helped bonds stabilize.
Stocks and Commodities
Earnings season wrapped up on a strong note, extending momentum from the prior quarter: in the US, a broad positive earnings surprise and double‑digit profit growth set a constructive backdrop, led by technology. Against that strength, EPS growth forecasts for the “Magnificent Seven” moved half a percentage point higher from 2025 to 22.5% for 2026, compared to 11% for rest of the market. Yet, equities prices stayed muted in November, reflecting a market already priced for perfection and increasingly sensitive to valuation and execution risks.
From this backdrop, defensive sector leadership re‑emerged. The healthcare, utilities and staples sectors outperformed while technology lagged, reversing the pro‑cyclical bias that had characterized the post May recovery. With the Conference Board’s index falling to its lowest since April, data appeared to show a slow down in demand, confirming the markets view of a high chance of a December rate cut.
Across Europe (ex‑UK), earnings from financials and IT maintained their solid tone, while consumer names, especially automobiles, disappointed. European equities modestly outperformed the US in November, returning 1.1%, helped by a less technology concentrated index structure and a 12% EPS growth outlook for 2026. The UK’s market return was positive but more subdued at 0.4%, with the industrial and the consumer discretionary sector seeing declines, weighed by softer sentiment and inline with the cautious tone globally.
Japan’s equity advance was aided by currency dynamics: a weaker yen supported exporters and helped the TOPIX rise 1.4% in November. Elsewhere in Asia, investors took profits after a strong year, leaving Korea down 3% and Taiwan off 4% in USD terms. India slipped 0.2% but held up better than the regional average.
A final piece of the November mosaic was the long US government shutdown that ended mid‑month. The data vacuum it created elevated reliance on alternative indicators and contributed to choppy trading.
Commodities ended slightly higher as gains in precious metals offset weakness in energy and industrial metals. Oil sentiment stayed muted with forecasts of a surplus in coming years. The IEA projected supply growth outpacing demand into 2026, with a surplus near 4 million barrels per day, OPEC and EIA also echoed views of a forecasts oil surplus. These expectations weighed on Middle Eastern markets. Precious metals benefited from continued safe-haven demand.
Bonds
Fixed income markets navigated a month of uncertainty as investors contended with missing U.S. data following the prolonged government shutdown and debated the Federal Reserve’s next move. Concerns about tariff-related price pressures and fiscal expansion added to the complexity, with economists warning these factors could challenge price stability into 2026. By late November, sentiment shifted decisively toward a rate cut at the Fed’s December 10 meeting, with futures pricing an 87% probability of a .25% reduction. This pivot was reinforced by falling Treasury yields. The 10-year note eased to just below 4% from early-month highs near 4.17%, as markets anticipated easier policy despite lingering inflation risks.
US labor market signals were mixed. October’s payroll report showed 119,000 jobs added, beating expectations, yet unemployment edged up to 4.4%. At the same time, weekly jobless claims plunged to 191,000 by late November, the lowest since 2022, suggesting layoffs remain muted even as hiring slows. Consumer confidence told a different story, with the Conference Board index falling to 88.7, its weakest since April. These mixed economic signals lifted U.S. bonds to the top returns in global fixed income for the month of November, at a 0.6% monthly return.
Japanese government bonds were among the hardest hit, losing −1.3% in local currency terms. Yields climbed as investors questioned the sustainability of aggressive fiscal stimulus and ultra-loose monetary policy, particularly with inflation running hot. October CPI rose 3% year-over-year, and the yen’s depreciation amplifying imported price pressures. The fiscal backdrop added to volatility. Japan’s record stimulus package of ¥21.3 trillion sparked fears over debt sustainability, pushing long-end yields toward multi-year highs.
In the UK, inflation moderated to 3.6% Year over year, but Gilts barely moved, returning 0.1% for the month. Budget speculation dominated headlines, though the eventual announcement proved uneventful. Relief came from plans to reduce Gilt issuance, which helped steady sentiment even as fiscal consolidation loomed. Market participants continued to price in a potential Bank of England cut in December, supported by softer inflation expectations and subdued growth signals.
Eurozone bonds faced headwinds as German Bunds underperformed. Yields rose on news that Berlin’s net new borrowing would exceed initial projections, while inflation surprised slightly higher at 2.6% year over year, reinforcing expectations that ECB easing may be delayed. Inflation-linked bonds offered only modest protection, gaining only 0.2%, as duration risk and fiscal concerns weighed on performance.
Conclusion
November’s market pause showed a notable shift beneath the surface. Growth stocks, despite strong fundamentals, failed to lead, while defensive sectors such as healthcare and consumer staples outperformed, a reversal from earlier in the year as investors sought stability amid policy uncertainty and valuation concerns. This rotation underscores that elevated valuations often carry ambitious growth assumptions, leaving markets vulnerable if sentiment, particularly around AI, softens. Regional diversification remains critical to mitigate concentration risk and capture differentiated earnings trends, as seen in Europe and Japan’s relative resilience. Finally, high-quality bonds continue to play a vital role in portfolio risk management, especially with Fed easing expectations continuing and volatility persisting in interest rate policy globally.
