The political tests of November. Ben Laidler, Global Markets Strategist at eToro
PERSPECTIVES:
The stock market "breath" of the summer turned into a deeper "correction" in October, but we see reasons for contrary optimism going forward. Markets are pressured by rising bond yields and high oil prices.
Both stock and bond prices fell last month, with $BTC the safest haven.
In November, attention will be on the busy political calendar, the end of a positive earnings season and the start of the Christmas consumer test.
We expect bond yields and oil prices to stabilize and begin to relax, relieving heavily stressed markets and allowing a return to focus on earnings consolidation, the return of central bank "options" and strong technical data of unfavorable sentiment and improved seasonality.
OCTOBER:
Stocks have entered a "correction" again, falling more than 10% from July highs, US 10-year bond yields hit 5% and Brent oil prices rose above 90 $/bbl.
Geopolitical concerns increased following the Hamas attack on #Israel . Safe haven #Oro regained $2,000/oz, but "digital gold" #Bitcoin took center stage, rallying to $35,000, extending its asset class-leading gains this year. Third-quarter corporate results ended the S&P 500's nine-month earnings recession.
TSLA fell 20% on falling EV prices and fears of demand, and the six-week UAW strike came to an end. XOM and CVX dramatically boosted M&A with $115 billion in deals. WMT is beginning to see an impact on the cost of weight loss medications.
NOVEMBER:
The political agenda is complete, from the Middle East to an unusual meeting between Xi and Biden, through a possible shutdown of the US government and Dutch and Argentine voters going to the polls.
Nvidia (November 21) will put the final touch on the Q3 earnings season, after Apple (November 2) and Walmart (November 16). Alibaba and Tencent are teaming up for the first time to celebrate the big Singles' Day in China, and Thanksgiving kicks off the holiday spending season.
The United Nations Conference on Climate Change (COP 28) begins, in a year in which renewable energies have recorded the worst results and the "big oil companies" have redoubled their commitment to fossil fuels. November is typically the third best month for global equities, with an average rise of 1.2%.
