November 2024 market commentary

The US election was the principal driver of major equity market movements through November. Donald Trump’s victory and the securing of a Republican majority in both houses of Congress fuelled expectations of further tax cuts and the introduction of a more nationalist trade policy which boosted US equities and saw the S&P 500 gain 5.87% over the month. Concerns about the future impacts of US trade policies and the looming threat of an increase in tariffs produced the opposite effect in Europe with the Euro STOXX 50 closing down 0.32%. Strong financial data from the UK economy helped the FTSE100 to a 2.61% gain by the month’s end. The threat of a tariff-related trade spat with the US further deflated Chinese markets struggling with weak domestic and regional consumer demand. 

(All returns are sourced from FactSet and are reported as total return in local currency for the period 01/11/2024 — 29/11/2024)

November market summary

The likelihood of future deregulation in the US helped to boost the domestic energy sector while industries weighed up the prospective benefits of tax cuts and changing trade policies. Earnings data for Q3 was ahead of expectations, fuelled in part by an increase in US retail sales. Progress on slowing the rate of inflation and stronger employment data helped to reinforce the Federal Reserve’s shift towards a more neutral stance on rate cuts, and the Fed’s November meeting saw base rates reduced by 25 basis points to a target range of 4.50%-4.75%. Concerns that policies promised by the incoming Republican administration could reignite inflation in early 2025 reduced expectations of further cuts through the year, though the Fed maintained that positive economic data could still trigger rate cuts in December and beyond.

There was less clarity on the possible impacts of US trade tariffs on the UK economy, though there was broad consensus that while UK goods wouldn’t entirely escape the anticipated increases, the economic effects were likely to be minimal. The Bank of England voted 8-1 to cut its base rate to 4.75% days before inflation concerns were revived by the biggest rise in headline inflation in two years, driven largely by a spike in household energy costs. Bank governor Andrew Bailey also weighed in on the side of UK retailers who warned that changes to employer national insurance contributions would negatively impact businesses through job losses and rising prices.

A sustained downturn in manufacturing across the eurozone was compounded by the greater likelihood of US trade barriers and growing political discord in France and Germany. Consumer demand among many of the bloc’s major economies remained weak and earnings warnings continued across the automotive and consumer goods sectors.

COP29: mixed results and fears of a second US U-turn on climate commitments

Climate finance and effective global carbon markets were the dominant themes at COP29 in Baku, Azerbaijan. While negotiations resulted in an agreement to expand the current annual rate of global climate finance to $300 billion, it fell far short of the $1.3 trillion demanded by developing countries, some of which accused the COP29 presidency of approving the deal without their consent. Better progress was made on the establishment of a global mechanism for carbon markets under Article 6 of the Paris Agreement. This included clarification about methodologies for how countries would authorise and register carbon credit transactions and included safeguards to avoid double-counting of carbon credits and to protect human rights.

However, countries failed to agree on binding commitments to eliminate fossil fuel subsidies, and negotiations around national and regional responses to the results of COP28’s “global stocktake” of progress towards meeting the goals of the Paris Agreement – including a key pledge to transition away from fossil fuels – were set aside for next year’s conference in Brazil. The result of the US election all but confirmed a second Trump-led withdrawal from the Paris Agreement in early 2025, prompting fears that other governments might draw on populist sentiments to follow the president-elect’s example. Senior representatives of the EU, UK and China at COP29 responded by suggesting their countries would be willing to fill the leadership void left by a US withdrawal.

You can watch deputy head of Greenbank Nicola Day reflect on some of the key points, outcomes and shortfalls from this year’s COP in our video ‘COP29: A trickle of progress in a sea of challenges’ here.

World leaders agree on targets to accelerate action on antimicrobial resistance (AMR)

The UN’s recent High-level Meeting on Antimicrobial Resistance concluded with a joint declaration by attending world leaders to progress efforts to safeguard human, animal and plant disease prevention, enhance food safety and security, and reduce the effects of AMR on global public health.

Drug-resistant bacterial infections are responsible for millions of deaths worldwide with many directly attributable to AMR. The joint declaration noted that a significant percentage of those deaths occur among younger children and that a limited response would result in global average life expectancy falling 1.8 years by 2035. It also forecast that global AMR could result in $1 trillion of additional annual healthcare costs by 2050 and between $1 trillion and $3.4 trillion of annual GDP losses by 2030. This echoed an earlier projection by the Investor Action on AMR initiative that costs associated with AMR could lead to a 3.8% decrease in global GDP by 2050.

Targets outlined in the joint declaration included a commitment to reduce annual AMR-related human deaths and facilitate sustainable funding to kickstart investment programmes in national AMR strategies for at least 60% of countries by 2030. It further committed to ensuring basic water, sanitation, hygiene, and waste management services in all health care facilities, and efficient infection prevention and control programmes in 90% of countries, also by 2030. Significant reductions will be sought in antimicrobial drug use in global agriculture and food manufacturing systems and more will be done to prevent antimicrobial pollution and determine its wider environmental impacts.

Drug-resistant bacterial infections are responsible for millions of deaths worldwide with many directly attributable to antimicrobial resistance.

Intergovernmental Negotiating Committee’s fifth session (INC-5) drafts new text for global action on plastic pollution

Negotiations at INC-5 in Busan, South Korea ended without a legally binding global treaty on terrestrial and marine plastic pollution, but did produce agreed text to be further negotiated at the next proposed session in 2025. A key point of divergence between countries is whether the focus for action should be the phase down of plastics use or greater investment in collection and recycling facilities.

A key point of divergence between countries is whether the focus for action should be the phase down of plastics use or greater investment in collection and recycling facilities.

The agreed negotiating text recognised that the world’s commitment to reverse and remedy the severe effects of plastic pollution on ecosystems and human health was “clear and undeniable”. Binding measures regarding product design were among the objectives outlined in the text, which also included: recognition of the need for just and equitable transitions; the overweight contribution of developed countries to global plastic pollution; and the responsibility of all countries to ensure that plastic use within their own jurisdictions avoided causing damage to habitats and ecosystems at a wider scale.     

You can find out more about our Green Shoots webinar on the topic of 'Tackling plastic pollution' here.

LinkedIn report warns of a growing worldwide green skills gap

LinkedIn’s annual Global Climate Talent Stocktake indicated that while international demand for green talent is increasing, slow accompanying growth in supply is threatening a significant future skills gap. From 2023 to 2024, global demand grew by 11.6% against a supply increase of just 5.6% - should a similar annual shortfall continue through to 2050, the report projects that the gap in global green skills could expand to 101.5%.

Hiring rates for green talent were also calculated to be 54.6% greater than for the overall global workforce. Insufficient supply also poses a threat to Germany’s long-term net zero ambitions where there’s been a significant uptick in demand for green hydrogen production and hydrogen storage expertise.

An additional report by utilities giant Suez warned that. Echoing the Chartered Institution of Wastes Management’s projection that 200,000 jobs will be needed by 2040 to manage the waste and resources sector’s transition, the Suez report encouraged the government to deliver targeted investment, long-term policy frameworks, and stronger collaboration with businesses and educational institutions.

…Without direct government action to develop green skills in high-growth sectors like renewable energy, low-carbon manufacturing and the circular economy, the UK would fall behind on its net zero transition targets.