As anticipated in our last monthly report, November saw a resurgence in appetite for growth stocks as the market now expects an end to the rate rising cycle. The technology sector led the market and was the most powerful contributor to the monthly return. Industrials and consumer stocks also outperformed while financials, healthcare and energy lagged. Our Strategy’s minimal exposure to these lagging sectors proved advantageous.
Inflation in Europe is falling back towards the 2% target level and the market is expecting rate cuts on both sides of the Atlantic by Q2 next year. Barring black swan type events, equities should continue to be reasonably well supported going into the New Year. The lack of clarity on the direction of interest rates has posed challenges for the Strategy in recent months, especially given its growth stock orientation, but this cloud now appears to be dissipating as we look forward to falling inflation and lower interest rates in 2024.
