After three months of declines, Australia’s benchmark S&P/ASX 200 index jumped 5.03 per cent in November, according to the latest data from S&P Dow Jones Indices.
With one month left to go in 2023, the ASX 200 is up 4.81 per cent. So far this quarter, the index has gained 1.06 per cent, weighed down by the 3.78 per cent drop seen in October.
“As rates peaked with easing inflation, equities rallied globally, with Australia’s S&P/ASX 200 rising 5 per cent in November,” S&P Dow Jones Indices said.
“Small caps rose even further, with S&P/ASX Small Ordinaries up 7 per cent. With investors’ concern on macro uncertainties abating, S&P/ASX 200 VIX melted to 9.67, the lowest level since June 2018.”
After S&P/ASX Small Ordinaries, the next best-performing index was the S&P/ASX MidCap 50 (5.35 per cent), closely followed by the S&P/ASX 300 (5.06 per cent).
The S&P/ASX 100 (4.83 per cent), the S&P/ASX 20 (4.78 per cent), and the S&P/ASX 50 (4.75 per cent) all rose by more than 4 per cent during November. Meanwhile, the S&P/ASX Emerging Companies was up 3.66 per cent.
Within the ASX 200, health care (11.71 per cent) and real estate (10.79 per cent) both soared more than 10 per cent and were the month’s best-performing sectors.
Information technology (7.35 per cent), industrials (6.65 per cent), financials (5.71 per cent), materials (5.00 per cent), consumer discretionary (4.84 per cent), and communication services (2.80 per cent) also had a positive month.
In contrast, the energy (-7.41 per cent), utilities (-6.03 per cent), and consumer staples (-0.76 per cent) sectors all ended November in the red.
Year to date, information technology (22.33 per cent) and consumer discretionary (15.08 per cent) are the strongest-performing sectors, while health care (-4.89 per cent) and consumer staples (-3.58 per cent) are the worst performers.
Commenting on November’s global market gains, AMP chief economist Shane Oliver said that shares are “technically overbought and at risk of a consolidation or short-term pull back”.
“However, further gains are likely into year end and early next year as inflation continues to ease, the monetary policy environment turns progressively less threatening, economic indicators remain consistent with a soft landing, geopolitical threats likely take a back seat for a while and positive share market seasonality remains in place with the Santa Rally normally kicking in later this month,” he added.
Dr Oliver noted that there are still significant risks clouding the outlook, including sticky services inflation potentially leading to “higher for longer” interest rates, the chance of a recession, uncertainty in China, and ongoing geopolitical threats.
“The risk of another rate hike is perhaps the greatest in Australia and so this could see Australian shares remain a relative underperformer for a while yet. So, shares are still likely to remain volatile,” he continued.
“Our base case remains that global and Australian shares can trend up as easing inflation takes pressure off central banks and any recession is likely to be mild. But expect lots of bumps along the way.”
