NAVIGATING UNCERTAINTY AND MIXED MARKET SIGNALS, SHIFTING YIELDS AND EVOLVING POLICY DEVELOPMENTS
MONTHLY HIGHLIGHTS
- Upgraded global growth forecasts, with analysts attributing part of the revision to mainland China as the widely followed November update to the global economic outlook nudged up real GDP growth projections for 2025–2027 for the world, with a notable boost coming from a more optimistic assessment of economic momentum in mainland China.
- Soft US data was associated with renewed optimism over rate cuts which some analysts suggested supporting risk assets towards month-end as weaker-than-expected US economic releases rekindled market expectations that the Federal Reserve might begin cutting interest rates soon. That pivot coincided with risk sentiment globally improving with equities rebounding, bond yields in the US and Europe declined, and investors appeared more willing to add risk exposure.
- During the month a sharp tech-sector sell-off added to market volatility and refocused attention on concentration risk. Mid-month, markets declined notably within the technology sector, with global equity indices shifting lower and prompting renewed concerns about valuations after a long AI-fuelled rally.
- A rare technology glitch at a major derivatives venue disrupted trading, contributed to increased volatility in global markets with the CME group facing an unexpected outage caused by data-centre overheating, forcing a halt to trading and adding to uncertainty across futures, commodities and FX markets.
- The European Central Bank (ECB) warned of strains from stretched public finances with potential ripple effects across bond markets. In its November financial-stability review, the ECB cautioned that many euro-area countries face rising fiscal strain, and that worries over sovereign finances could have knock-on effects through global bond markets if investor confidence wobbles.
- Global markets ended November on a cautiously more positive note, with analysts citing easing Fed concerns and renewed equity interest as contributing factors. By the close of the month, global stocks gained ground as investors warmed to the idea of an imminent US rate cut. In this environment, many risk assets recorded gains with equities, gold and some commodity markets all showing price support over the period with bond yields in the US and Europe continued to drift lower.
EQUITY MARKETS
Global equity markets delivered a distinctly mixed performance, marked by clear regional divergence. Several major Asian indices registered meaningful declines, contrasting with the modest but positive returns recorded across a broad swathe of European and American markets. This disparity is consistent with a shift in investor preference away from regions facing currency pressures, weakening export dynamics, and heightened volatility within the semiconductor sector. The sharpest weakness was observed in North Asia, where leading Japanese and Chinese benchmarks experienced pronounced pullbacks with the Nikkei 225 and the CSI 300 dropping 4 per cent and 2.4 per cent respectively. These markets appeared particularly sensitive to softer global demand indicators, continued valuation concerns in technology-heavy segments, and renewed caution surrounding economies that remain heavily dependent on external trade flows.
Europe, by comparison, demonstrated greater resilience. Most regional indices posted small but positive gains, with both large-cap and mid-cap benchmarks showing improved stability. This steadiness may suggest that defensive sector positioning, more encouraging inflation trends, and relative value opportunities which some suggested helped shield European markets from broader global volatility. In the United States, equity markets delivered a muted yet constructive picture. Flagship indices, including the S&P 500, Dow Jones and Russell series, edged moderately higher with a return of 0.25%, 0.5% and 1% respectively. These incremental gains indicate an environment in which investors continue to weigh robust labour-market data against lingering uncertainty about the Federal Reserve’s policy direction.
Smaller and emerging European markets outperformed their larger counterparts, with performance associated with stronger domestic fundamentals, reduced regulatory burdens, and comparatively appealing valuations. This outperformance was particularly evident across Central and Eastern Europe, where sentiment appeared more stable than in the larger, export-oriented economies. Specifically, the Bucharest stock market rose by 3.2% for the month with the Budapest stock market returning a respectable return of 2%. Across the emerging-market complex, performance varied widely. Southeast and South Asian markets posted moderate gains, while Latin America was the strongest performing region over the period. Brazil was associated with improved macroeconomic sentiment, currency support, and enhanced investor appetite for cyclical exposure with a November return of 6.4%. Energy-linked and commodity-focused markets saw the highest month-on-month gains. Stronger terms of trade and healthier external balances were cited by analysts as factors in renewed investor interest in economies with significant commodity leverage and firm domestic recovery narratives.
In the corporate world, Nvidia delivered another impressive set of quarterly results during November, comfortably surpassing market expectations and reinforcing its position at the forefront of the global AI boom. Strong demand for its data-centre chips may have driven a large share of the performance, with cloud providers and enterprise clients continuing to scale their AI infrastructure. Management struck an upbeat tone on the future, issuing guidance that pointed to continued momentum into the final quarter of the year. This may have helped ease concerns that the broader AI investment cycle might be cooling and reassured investors that Nvidia’s growth engine remains firmly intact.
Alphabet was among the better-performing technology names among the major technology groups reporting over the same period. Its results highlighted resilience across digital advertising, search and cloud services at a time when several peers had disappointed. Market commentary highlighted the company’s ability to balance steady revenue growth with disciplined cost control, particularly in an environment marked by heightened scrutiny of AI-related spending. The performance was seen as providing some support to the technology sector, helping counterbalance broader concerns about over-extended valuations.
HP posted a solid end to its financial year, reporting steady revenue growth and healthy profitability against a backdrop of uneven global PC demand. Its Personal Systems division enjoyed another quarter of rising sales, continuing a multi-quarter trend of improvement driven by commercial upgrades and stronger consumer interest in refreshed device ranges. The company’s ability to maintain stable margins while investing in next-generation technologies was interpreted by some analysts as evidence that its business model remains adaptable, even as the broader hardware industry faces shifting dynamics and heightened competition.
Best Buy’s latest update came in stronger than previously expected among major retailers heading into the holiday season. The company reported stronger-than-expected sales momentum, supported by demand for personal electronics, home computing devices and gaming products. This strength allowed management to raise its full-year revenue and profit outlook, indicating management’s increased confidence in consumer demand despite broader macroeconomic uncertainties. The announcement contributed to a more positive tone to the retail landscape, which has otherwise been marked by mixed signals on household spending capacity.
CREDIT MARKETS
Government bond markets delivered a mixed yet broadly subdued performance over the period, with long-dated European sovereigns coming under mild pressure. The softer tone across the euro area linked to persistent uncertainty surrounding inflation dynamics, cautious messaging from the European Central Bank, and a gradual upward drift in yields at the longer end of the curve. The 15+ year Euro Government Bonds have lagged most other credit instruments for the month with a negative performance of -0.6%. In contrast, shorter maturities held up more firmly, generating slightly positive returns as markets continued to price an extended pause in policy normalisation. UK gilts performed somewhat better across the curve, supported by stabilising inflation expectations and more constructive domestic macroeconomic indicators. The relative calm in the gilt market may suggest that investors are growing more comfortable with the Bank of England’s measured policy stance and the government’s fiscal positioning following the announcement of the budget measures adopted by the UK Chancellor Rachel Reeves.
US Treasuries outpaced most major sovereign markets, particularly in intermediate and longer maturities. The belly of the curve in the US has outperformed other segments the US yield curve with a November performance of around 1%. This was linked to improved investor sentiment towards the Federal Reserve’s forward guidance, with markets interpreting official commentary as consistent with a gradual easing cycle beginning in 2026. The corresponding decline in yields supported stronger total returns relative to other developed bond markets. Across emerging-market sovereigns, performance ranged from stable to moderately positive. These markets were supported by the backdrop of easing global yields and improving risk appetite. Local-currency exposures with strong macroeconomic foundations led by India performed particularly well, buoyed by sustained capital inflows and a favourable domestic inflation environment.
Corporate credit also delivered a modestly positive month, with both investment-grade and high-yield segments posting supportive returns. Investment-grade credit was bolstered by steady spreads and a calmer rates environment, especially in the United States where corporate balance sheets remain sound. Euro-denominated investment-grade bonds produced more muted results, reflecting softer regional economic data and a weaker corporate earnings outlook. Within high yield, global markets registered healthy gains as investors continued to favour carry-oriented assets in search of income. The strongest improvements were seen in US and emerging-market high yield, driven by constructive commodity sentiment and stabilising default expectations. European high yield advanced more cautiously, weighed down by slower economic momentum and pockets of sectoral weakness. Rising dispersion across regions and credit ratings may suggest a market that is increasingly selective, rewarding issuers with resilient cash flows and weaker performance for those more exposed to cyclical pressures or refinancing risk. This shift highlights the growing importance of credit selection as markets approach the end of the tightening cycle and prepare for potential policy adjustments in 2026.
CENTRAL BANKING, THE ECONOMY AND GEO-POLITICS
Over November, the ECB delivered a clear message in regard to its monetary policy by saying that it is “in a good place” for now. In its latest meeting at the end of October, the Governing Council chose to leave interest rates unchanged. The deposit rate remained at 2 per cent, which policymakers judged sufficiently robust to absorb shocks without destabilising the economy.
Nonetheless, the internal debate was visible as some members believe the easing cycle may be over, while others favoured retaining full flexibility in case inflation falls off. This divergence leaves markets with little conviction about fresh rate moves and only a modest one-in-three chance of further cuts in 2026. In parallel, the ECB’s November 2025 Financial Stability Review (FSR) painted a cautious picture of the euro-area financial landscape. It may suggest that vulnerabilities remain elevated, pointing to risks arising from stretched valuations, high concentration in certain asset markets (notably, tech and AI-related equities), and strong interlinkages between traditional banks and non-bank financial intermediaries.
In the United States, November turned into a month of growing ambiguity around the next steps of the Federal Reserve. At the start of the month, policymakers at the Fed remained divided with some emphasising the continued strength of the economy and labour market, while others pointed to softer recent data and rising global uncertainty. In the United States, November turned into a month of growing ambiguity around the next steps of the Federal Reserve. Consequently, hedging activity surged with investors ramping up positions in swaptions and overnight-rate derivatives, seeking protection against shifting policy odds.
Meanwhile in Tokyo, the BoJ is starting to feel the heat. Recent data showed that consumer prices in the capital rose 2.8 percent year-on-year in November, comfortably above the bank’s target. That increase was broad-based, underpinned by surging food prices (rice, coffee, chocolate among the worst affected) even as service inflation remained subdued. This strong inflation reading, combined with persistent labour-market tightness, has reignited debate over when and how fast the BoJ should tighten. In a recent speech, board member Asahi Noguchi argued for a gradual but sustained path of rate increases, warning that keeping real rates too low for too long risks fuelling further inflation and weakening the yen.
In late November, a fresh update to global growth forecasts was associated with a more cautiously optimistic tone. Analysts nudged up the expected trajectory for 2025 through 2027, reflecting a modest but meaningful pickup in economic activity notably helped by a stronger-than-expected rebound in mainland China. Still, the wider backdrop remains challenging. Manufacturing across major economies has shown signs of strain: factory orders and export-led growth have sagged under the weight of weaker demand from the United States and elevated tariffs. In the euro-zone, industrial activity has essentially flatlined, while Germany’s engineering output has slumped and other core economies, including France and Italy have seen softness or contraction. Global trade remains under pressure from tectonic policy shifts. Tariff regimes, particularly emanating from the United States, continue to distort traditional trade flows and manufacturing export patterns. These trade frictions are regarded by many analysts as an important factor contributing to softer industrial orders, weakening sentiment in key manufacturing hubs and encouraging exporters to recalibrate supply-chain strategies.
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