US Equities

November was a strong month for the U.S. equity market, as stocks surged following Trump’s victory in the presidential election. Investor optimism was fueled by expectations that his policy agenda would drive economic growth, lower taxes, and ease regulations. High-volatility securities led the rally, outperforming the broader market by 116 basis points, while smaller companies saw notable gains on the belief that domestically focused businesses would benefit most from Trump’s proposed policies.

The unemployment rate rose to 4.2% in November after stabilizing at 4.1% for the previous two months. Core Consumer Prices in the United States rose to 322.66 points in November, up from 321.67 points in October 2024. While the US Manufacturing PMI rose higher to 48.4 from 46.8 in October, demand remains weak as companies prepare plans for 2025 with the benefit of the election cycle ending.

In November, all Volatility subfactors outperformed the market except for Dividend Yield 5Y, which underperformed by 60 basis points. Growth subfactors also delivered strong results, consistently outperforming the market. Short-term Momentum stood out, exceeding market performance by 160 basis points.

Stocks with stable short-term momentum that contributed to the US's performance in November include info tech company NVIDIA Corp (4.14% in Nov.) and consumer discretionary company Tesla (38.15% in Nov.) Additionally, companies with high Volatility 3Y, including communication services company Meta Platforms (+1.19% in Nov) and info tech company Palantir Tech (61.41% in Nov), also contributed to the outperformance.

European Equities

European equities posted a negative return of -1.3%, driven by underperformance in high-yield and value securities. Momentum outperformed the broader market, delivering an average gain of 47 basis points. As in the US, short-term momentum stood out, surpassing the market by 70 basis points.

The Euro Area's core inflation rate declined month-over-month to -0.60% in November from 0.20% in October 2024. Similarly, the unemployment rate in the European Union held steady at 6.3% in November. The Euro Area’s manufacturing sector deteriorated further in November; the Eurozone Manufacturing PMI dropped to 45.2.

Key short-term momentum drivers in European stocks in November include German info tech company SAP Se (+2.0% in November) and industrials company Siemens Energy (+32.25% in November).

UK Equities

In November, the UK equity market outperformed the market by 2.6%. The outperformance delivered by the UK this month was predominantly driven by Volatility and Momentum, which led the markets by an average of 43bps and 23bps, respectively.

The annual inflation rate in the UK rose to 2.3% in October 2024, the highest in six months, up from 1.7% in September. Manufacturing production in the UK declined by 1% month-over-month in September 2024, worse than the market expectation of a 0.1% decrease, following a revised 1.3% increase in the previous month. The unemployment rate in the United Kingdom increased to 4.3% from July to September 2024, up from 4%.

British stocks with a strong short-term momentum that outperformed this month include industrials company Rolls Royce Holdings plc (+3.2% in Nov); financials company London Stock Exchange (+6.0% in Nov.)

Stocks with high Volatility 3Y outperforming the UK market include energy company BP PLC (2.6% in November) and consumer staples company British American Tobacco PLC (9.6% in November).

Emerging Market Equities

The factor trend in Emerging Markets favoured Value and Quality, outperforming the market by 60bps and 18bps, respectively. The region's negative 3.0% performance was primarily driven by Volatility subfactors, with market beta.

India's annual inflation rate eased to 5.48% in November 2024, down from 6.21% in the previous month, roughly in line with market expectations of 5.5% Unemployment Rate in India decreased to 8 percent in November from 8.70 percent in October. Mexico's annual inflation rate decreased to 4.55% in November 2024, down from 4.76% in the previous month, and the unemployment rate fell to 2.5% in October 2024, down from 2.9% in the previous month.

Emerging Markets equities that outperformed in November, captured by the momentum 12-1 subfactor, include Chinese info tech company Xiaomi Corp (+1.4% in Nov) and Saudi energy company Saudi Arabian Oil (+3.4% in Nov). Companies with strong dividend yields include Indian financials company HDFC Bank (+3.0% in Nov).

Canadian Equities

As in the previous month, the factor performance trend in Canada favored Volatility and Momentum. Volatility 3Y and Volatility 1Y outperformed the market tremendously by 260bps and 250bps, respectively, this month.

Canada’s annual inflation rate increased to 2% in October 2024, up from a more-than-three-year low of 1.6% in the previous month. Canada's manufacturing production fell by 4.30% in September 2024 compared to the same month in the previous year.

Stocks with strong momentum 12-1 in the region include Info tech company Shopify (+47.27% in November) and financials company Brookfield Corp. (+16.0 % in November).

Appendix: How to read the charts

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