What moved the market in MO-vember

December 13, 2017 | Tim Fisher


Share

US tax reform and the change in leadership at the Federal Reserve dominated the headlines in November

What moved the markets in November: US tax reform and the change in leadership at the Federal Reserve dominated the headlines in November. These stories played out against a backdrop of rising equity markets and flattening North American yield curves. Senate Republicans led a debate throughout the month over their proposed tax reform, finally getting a bill to the Senate at the end of the month.

 

Market highlights:

United States President Donald Trump finally put an end to the rumors around his pick to replace Janet Yellen as the next Fed Chair. President Trump nominated Jerome Powell for the role.

 

The Bank of Canada released its semi-annual Financial System Review. Key vulnerabilities to financial stability in Canada included a high level of household debt and housing market imbalances. However, the government did emphasized that the financial system continues to be resilient, citing stronger growth and job creation.

 

Equity markets were positive in North America. The TSX moved up 0.5%, mostly driven by the 18.3% gain in the Healthcare sector.

In the U.S., the S&P 500 closed up 3.1%, with all sectors ending the month in positive territory.

 

The trend on gold has been weak, which is unusual, given the large amount of worldwide concerns that are present today. Oddly, gold is near the same levels that it was one, two, and three years ago.

 

What to expect going forward: 2017 will go down as an unusual year of heightened political uncertainty accompanied by strong financial market performance and accelerating global economic growth. Uncertainty about US immigration, trade and tax policy, the early steps toward the Brexit negotiations and instability caused by North Korea’s missile tests created a tense backdrop. Under usual circumstances, investors would shy away from risky assets and consumer and business confidence would soften. Not so in 2017, with the global economy on track to post the strongest growth since 2014 and the world stock market headed for a double-digit gain. Furthermore, 2017 is closing out with solid momentum teeing up for global growth to stay on this firm growth path in 2018. In 2018, businesses will continue to benefit from strengthening growth, steady oil prices, and low financing costs, with a prospective corporate tax rate cut also teeing up for firms to continue to put money to work.