Market Review for November

Hamesh Sharma

14 December, 2023

5 Minute Read

Update on markets for November from our investment team

What a difference a month in markets makes. In sharp contrast to a very tough October, November saw both share and bond markets surge higher. The US S&P 500 index jumped 9% over the month. While a large part of this year’s rally has been driven by the large US technology companies like Apple and Microsoft, the S&P 500 index is only 3% away from its all-time high and is trading at broadly fair value in terms of market valuation multiples.

Closer to home, the New Zealand market (NZX 50 index) gained 5.3%, while across the Tasman the Australian market (ASX 200 index) returned 4.5%. The primary driver of the rally is that interest rates continue to trend lower globally, with US 10-year rates down to 4.2% at the time of writing, after briefly trading above the 5% level in October. The fall in real interest rates has also seen gold rise to a record high and the value of Bitcoin surge, as the opportunity cost of holding these assets falls.

There hasn’t been a new catalyst for markets since our last monthly update, but there have been further signs that inflation is fading nicely and the labour market rebalancing, resulting in markets saying the Fed will cut next year well ahead of the November 2024 Presidential election. With US Fed interest rate cuts expected by the market sooner, importantly the US job markets looking healthy into Christmas, despite the headlines of job cuts from the likes of Spotify to Amazon.

Closer to home, the big economic snippet came from the Reserve Bank (RBNZ). While the RBNZ left the official cash rate unchanged at 5.5%, it warned a further hike may be required, with a full rate cut now not projected until mid-2025. The RBNZ is forecasting an inflationary shock from booming net migration. The market, however, remains unconvinced and has reaffirmed its view that the next move for the OCR is down (in mid-2024) and discounted the RBNZ’s view almost immediately. Interest rate cuts could not come sooner for many Kiwis - we are seeing signs of consumer stress on the back of higher rates, with auto loans and credit card arrears ticking up, while home loan arrears are also lifting off a low base. A recent news article pointed out that Afterpay started 2023 with $475 million in bad debts, in what has been a very tough year for buy-now pay-later businesses.

The NZ market has been an underperformer in recent times, with one of the factors of this being higher interest rates. courtesy of a heavy bias towards Infrastructure, Utilities, Telco, and Real Estate. With clear indications that interest rates are at an inflection point as central banks cut rates at the fastest pace since August 2020, it is worth reminding investors that the NZ share market was a leading beneficiary of rates compression through the 2000-2020s and should be well placed to outperform global equity markets following a period of underperformance as interest rates move lower.

Taking a bigger picture view, the market started out 2023 with elevated fears of recession, but China’s reopening, large fiscal stimulus in the US and Europe, and residual strength of US consumers stabilised growth. Various themes such as artificial intelligence also sparked market optimism resulting in markets delivering broadly positive performance. This highlights the risk of missing out on market rallies who do not remain invested in markets during periods of volatility. As we approach 2024, we continue to watch inflation data and economic demand, while also cognisant building geopolitical risks and what are now higher asset valuations.

Performance Table (swipe right to left)
30-Nov-23 1 Month 6 Months 1 Year 2 Years
3 Years
5 Years
Inception p.a
Start Date
Growth Fund
5.1% 0.6% 4.8% -2.3% 4.3% Sep-20
Responsibility Fund
6.9% 5.1% 10.3% 1.8% 8.8% 10.7% 8.9% Oct-17
Water Fund
7.5% 2.7% 8.1% -1.4% 6.8% 9.7% 8.4% Jun-10
Trans-Tasman Fund
3.2% -5.0% -2.5% -6.8% -2.0% 6.3% Sep-19
Property Fund
7.2% 5.3% -0.9% -8.8% -0.2% -1.4% 0.8% Jul-15
5.0% 0.7% 4.9% -2.0% 5.0% 8.5% Jul-19
4.2% 1.2% 4.9% -0.8% 4.1% 5.9% Jul-19
2.3% 1.5% 3.9% 0.4% 2.2% 3.2% Jul-19
Green Bond Fund
3.0% 0.7% Jan-23
Hamesh Sharma

Hamesh joined Pathfinder in April 2019 and primarily manages Australasian equities. Hamesh has 10 years’ financial markets experience, beginning his career as an analyst in the investment strategy team at Goldman Sachs JBWere, after a summer at the Reserve Bank of New Zealand. Prior to Pathfinder, he co-founded an independent stock market research firm. Hamesh holds a BCom (Hons)/LLB from Auckland University.