Stock market fireworks in November

November was an exciting month on the world’s stock markets, as the graph above shows. Most experts did not expect it to look like this!

Cast your mind back to Halloween where there was plenty to be anxious about. For a start, the US presidential election was imminent. While it was widely forecast that Joe Biden would win, there was much less certainty that Donald Trump would recognise he had lost. Alongside this, serious concerns were shared about a gridlocked US government with a Democratic president unable to pass legislation through a Republican controlled Senate.

Globally, the key concern was the second or, in some cases, third wave of the Covid-19 pandemic, prompting a new round of lockdowns with their inevitable impact on economic growth.

However, all that October gloom evaporated quickly in November. The FTSE100 had its best month since January 1989, rising by 12.4%. It had been on course to set a new record before a sharp fall on 30 November, possibly from profit-takers. Over on Wall Street, the Dow Jones Index had its best month since January 1987. At one point in November, the Dow hit a new all-time record of over 30,000 – a “sacred number”, according to the outgoing president, who had pinned his re-election hopes on a strong economy.

So, what happened to make the world’s markets move from despair to elation? Looking back, two likely causes stand out:

• The US election was not the disaster that had been feared. Mr Trump has revealed that he will be moving out of 1600 Pennsylvania Avenue in January, despite a number of ongoing lawsuits and social media outbursts. At the same time, markets seem to have concluded that, Georgia Senate run-offs aside, a gridlocked administration may not be such as bad idea if it means the status quo is maintained.
• Perhaps the biggest news of all is the reveal of three successful Covid-19 vaccine trials, allowing investors to see a way out of the pandemic in 2021.

November was once again a reminder of how tricky it is to try to time investing in markets. It was certainly not a month to miss while sitting on the sidelines.

The value of your investment and the income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.  

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.