Market Commentary

November 2025

Global shares were mixed through November, with the MSCI World Index – Net closing the month up 0.11% in unhedged AUD terms. In hedged AUD terms, the index returned 0.26%.

Strong performance at the end of the month helped claw back mid-month losses, spurred in part by news about shifts around AI. Chip maker Nvidia’s share price fell 2.4% after reports surfaced that Meta was considering buying custom TPUs – tensor processing units developed specifically for AI and are much more efficient than Nvidia’s GPUs. High levels of infrastructure spending are weighing on investors, with Meta projected to spend more than US$72 billion on AI infrastructure and Amazon pledging another US$50 billion. The US president in late November launched the “Genesis Mission”, which is strategic investment into AI, likening it to the urgency and ambition of the Manhattan Project that developed nuclear weapons.

The shutdown of the US government – 43 days in total – combined with stubborn inflation levels weighed on consumers. The Conference Board’s consumer confidence survey reported the lowest level of consumer confidence of 88.7, the lowest reading since the April “Liberation Day” tariff announcements that cause global share markets to plunge. A delayed September jobs report from the US Bureau of Labor Statistics found that the US added 119,000 jobs, a change from a summer slowdown that appeared to cool off the labour market. The report also included a downward revision for August, showing 4,000 jobs were lost for the month rather than 22,000 added. In its November Beige Book, the Fed noted weaker labour demand including increased layoff announcements and hiring freezes. Some firms are also reducing worker hours to get ahead of an expected slowdown in demand. 

The US Federal Reserve is set to hold a policy meeting on December 9-10 before several important economic reports are set to be published; the government shutdown has limited the amount of information that is available to support a decision, however general sentiment has shifted in favour of an interest rate cut to help reduce expenses as well as boost hiring. Holding rates steady at 3.75%-4.00% would protect against tariff-induced inflation; a rate rise is unlikely. 

Central bank activity

The Bank of England (BoE) kept its interest rates at 4% at its November meeting, a 5-4 decision. The decision, which was not surprising, noted that the BoE believe that inflation has peaked, with the October core inflation rate at 3.6%, which is a slight dip from September’s 3.8% figure but still significantly above the 2% target.

While nothing is official, European Central Bank (ECB) policymaker Martins Kazaks said in late November that it’s too early to consider another rate cut. The next ECB meeting is on 18 December.

Bank of Japan (BoJ) board member Asahi Noguchi has made public comments that the central bank should take a measured approach to raising rates, arguing that if they increase too quickly it could hurt company wage-hike momentum and negatively impact that central bank’s ability to reach its 2% inflation target. This signals for a potential rate rise from the BoJ at its December meeting.

Australian activity

The Australian share market performed worse than its international counterparts, with the S&P/ASX 300 Accumulation Index falling around 2.64% over the month. The sell-off was broad based, with no particular sectors bearing the brunt of the downturn. Financial shares struggled, with the sector shedding more than 7% of value, its worst month since 2022. Dips came after weak earnings reports and surprisingly high inflation figures, all-but-guaranteeing the Reserve Bank of Australia (RBA) would not cut rates at its December meeting – and may now increase it. Major bank CEO commentary set expectations that rates would remain high well into 2026, further weighing on investor sentiment.

The headline inflation rate rose to 3.8% in October from 3.6% the month before and Tech had its weakest month since February, falling more than 11% as global tech valuations came under scrutiny.

Fixed income performance

In terms of fixed income, global bonds fell slightly over the period, with the Bloomberg Global Aggregate Index – $A hedged returning -0.18%. Longer-term Australian government bond yields were higher ¹, reaching their highest levels since mid-January supported by the growing belief that there will be no rate cuts this year and potentially a rise in early 2026.

Australian bonds were down for the month, continuing the trend started when prices peaked in mid-October, as measured by the Bloomberg AusBond Composite 0+ Year Index. High levels of inflation continues to put pressure on the RBA, which is flowing through to domestic government bond yields, which rose through the month.

The Australian cash market returned 0.3% over the period, as measured by the Bloomberg AusBond Bank Bill Index.

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¹ Bond yields have an inverse relationship with bond prices, meaning when yields rise, prices fall and vice versa.