November
The Australian share market was up an incredible (+10.2%) in November. The last time the share market delivered a return that good was March 1988 – Bob Hawke was Prime Minister and the Berlin Wall was still in place. The rise was on the back of positive vaccine news, a decisive US election outcome, the lowering of interest rates by the Reserve Bank and increasing commodity prices. Covid cases in the US and Europe continued to hit record highs but investors are now factoring in returning to a normal way of life at some point in 2021. The 12 month return is now only slightly negative at (-1.6%) and the current dividend yield from owning the market is just over 4% when you include the franking credits. The yield should improve significantly in the new year with both the Banks and Iron Ore miners expected to increase their dividend payments.
Energy was the best performing sector, up (+28%) after the Oil price jumped. The Banks continued their turnaround up (+18.3%) for the month, while the Media & Entertainment sector delivered (+15.4%). Consumer Staples (supermarkets) was the only negative sector for November, down (-0.7%), while the Technology sector also lagged the market with big names like Afterpay falling slightly in value.
The world share market climbed (+11.0%) as the US share market reached a record high, the French market leapt (+20.1%), Germany (+15%) and the UK (+12.7%). The US share market rose (5.3%) in the week after the US election so it seems at the moment it doesn’t really matter who is in control of the US. The Tesla share price jumped another (+24%) in November. Tesla has increased (+650%) since the start of the year and is now worth more than the combined value of Ford, Honda, BMW, GM, Daimler, Volkswagen and Toyota. Tesla’s crazy run may be the reason Apple recently announced it is developing an electric car to be delivered in 2024.
The price of Oil (+27%) and Iron Ore (+11%) both jumped while the price of Gold fell (-6.3%). The Australian dollar continued to rally against the US dollar (+5.0%), even after the Reserve Bank reduced interest rates at its November meeting from 0.25% to 0.10%. The unemployment rate increased to 7%, while recent statistics show pay rises have been hard to come by in 2020. The latest quarterly wage price index figures show just 0.1% growth in wages. The good news is that inflation is only projected to be 1% for 2021, so things aren’t getting any more expensive. The Reserve Bank has also indicated it will not increase interest rates until inflation is considerably higher. It will take a big increase in the levels of employment for that to happen so interest rates look set to stay low for the foreseeable future.
The Core Logic national house price index recorded a second consecutive monthly rise in November, with prices up 0.8% over the month. Regional home values grew at double the rate of the combined capitals as the trend away from the cities continued. Melbourne now remains the only capital city where house prices have declined over the past 12 months, with prices still 5% below their recent peak.
Comments are closed.