Animal spirits

Devon Funds - Animal Spirits

By Greg Smith, Head of Retail at Devon Funds

The US led the way again, with the Dow Jones hitting a new record high. The 30-stock index jumped 7.5% amid optimism over the economy, post the election result. The US indices were buoyant in general. The S&P500 also hit a record, soaring 5.9% over the month, while the Nasdaq rose 5%, and has also hit a fresh record high over the past week. Smaller cap companies did even better with the Russell 2000 surging nearly 11%.  Amongst the large caps, Tesla was a standout, soaring over 40% with the EV maker seen as a beneficiary around Musk’s relationship with Trump.

A strong November bodes well for the next year if history is any guide. Going back to 1950, after registering a 5% gain or more in November, the S&P 500 has gone on to finish higher over the next 12 months 77% of the time, with an average of 12.8% over the period.

Inspired by another RBNZ rate cut, the kiwi market also enjoyed strong performance, with a gain of 3.4%. The Australian market was also robust, with the ASX200 soaring 3.8% to a new record high. Soft inflation and GDP prints have raised hopes of the RBA bringing forward the timeline for rate cuts, while Australia is also seen as potential beneficiary of some of Donald Trump’s polices. Technology and financials both performed strongly.