Market Moves: November

Table of Contents

Key Drivers

1. Global and Domestic Economic Influences: Expectations of slower interest rate cuts by central banks as economies continue to perform well has supported global sentiment and boosted growth-oriented sectors like technology and consumer discretionary

2. Corporate Earnings and Strategic Updates: Positive corporate developments were key, with CSL reaffirming robust guidance, Xero posting strong revenue and subscriber growth, and Origin Energy surging on a takeover proposal. Retailers like JB Hi-Fi and Harvey Norman also delivered strong pre-holiday sales, lifting consumer discretionary stocks.

3. Impact of Trump’s Election: Donald Trump’s re-election as U.S. President introduced global trade policy uncertainty, impacting Australian companies with international exposure. Market volatility was further influenced by commodity price fluctuations tied to anticipated U.S. tariffs, and the Australian dollar’s depreciation against the U.S. dollar affected exporters and importers alike.

Overall Market Moves

A very solid month for the XJO gaining 3.9%. Driven mainly by information technology, utilities and Consumer discretionary sectors. Better than expected retail sales certainly pushed the market along. International, the S&P 500 gained 5.7%, the Nasdaq put on 6% with the French market being the worst performer at -3.67%.

Moves in the XJO

The largest company by market capitalisation CBA contributed over 80 points to the index and along the way gained the title of the most expensive bank in the world. BHP was the largest detractor, taking 32 points out of the index.

Sector Moves

At a sector level, the information technology sector was dragged higher with the gains in the Nasdaq in the US. Utilities gained (after being the worst performers last month) with the small move lower in bond yields.

Company Moves

Options Moves

At the end of the month the XJO continues to the largest open interest with high net puts and net sold calls (both higher than last month) possibly indicating that markets are hedging against a pull back. CBA reflects the same trend.

BHP again has a high number of both sold calls and puts meaning the market is directionally uncertain about the short term future.

PLS is the largest shortest stock on the xjo and with increased volatility it likely traders may be using the options market to capitalise on gains and / or cover positions.

FMG has a very high number of sold Puts compared to calls. This could indicate two things:

Income traders believe the stock is oversold and it will move high and selling puts may be a good income trade.
Investors are happy to buy FMG around these prices and are comfortable to sell puts for as a way of entering a little cheaper.

Popular trades:

Selling calls in NST

With Gold hitting record highs in late October and option premiums being higher as a result of the volatility, several clients took the opportunity to sell covered calls for income and as a hedge against a fall in the gold price. With the share price pulling back because of a fall in the price of gold and an announcement regarding an acquisition, clients are on track for a full profit.

Moves Ahead

The market traditionally starts to quieten down from the third week of the month as we head into the Christmas break.

As we go into Christmas, we generally see lower volumes which can result in exaggerated moves in some stocks that hit the headlines.

With the market continuing to break new record highs, it’s not out of the question that we could see some investors take profits and risk off the table before Christmas. Volatility could increase from the second week with a number of funds likely to rebalance for the year’s end.

Interestingly in the US, volatility and the daily high-low ranges are very low combined with reports that downside hedges are being removed indicating that traders believe its market is going to grind higher. This will be the last Monthly Moves for the year, have a happy and safe Christmas break

Further Information

Our specialised team of advisors provide guidance for all levels of investors, tailoring your experience to help meet your investment needs.

As our client, iInvest Trading & Advisory will provide you with daily research, economic updates, and trading ideas.

We have offices in Burleigh Heads QLD and Beechworth Vic. To make an appointment to speak to one of our advisors please call. 07 55208788

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