Global equities experienced a volatile and generally softer month in November. An encouraging earnings season and continued enthusiasm around AI pushed several major indices to record highs early in the month, but sentiment deteriorated as investors grew more cautious about the global growth outlook, particularly with the U.S. Government shutdown delaying the release of key economic data. Equities rallied in the latter stages of the month after the shutdown ended and as AI leader Nvidia delivered a much stronger-than-expected result, reaffirming confidence in the AI narrative. European indices closed broadly flat on the month, while Asia was weaker, with Japan’s Nikkei falling around 4% - a meaningful pullback but following an exceptionally strong run earlier in the year.
US markets
S markets followed a similar three-stage pattern in November: early-month strength, a meaningful mid-month pullback, and a late-month rebound. The S&P 500 finished the month up 0.1%, the Dow gained 0.3%, while the tech-heavy Nasdaq ended down 1.5% as its recovery was less complete.
Optimism was reasonably high at the start of the month, with the major indices hitting record levels on the back of a strong start to the earnings season and the Federal Reserve’s latest rate cut. However, the narrative shifted as the U.S. Government shutdown stretched into its sixth week, becoming the longest in history. The absence of official data clouded visibility for investors and policymakers, while private-sector indicators (including layoff announcements and consumer-sentiment surveys) showed signs of weakness. Several household-confidence measures fell sharply during the shutdown, reflecting uncertainty around income, fiscal policy and the broader economic outlook. These dynamics contributed to mid-month weakness in equities, with the Nasdaq particularly affected.
The turning point came late in the month when the shutdown was resolved, allowing a backlog of delayed economic data to be released. The figures pointed to a cooling but still resilient environment: employment growth was better than expected, business surveys remained in expansion territory, and inflation indicators showed further moderation. This increased clarity helped stabilise sentiment.
Federal Reserve communication also played a key role in the late-month recovery. Several officials, including those considered influential in shaping policy, noted that the central bank may need to consider a “risk-management” rate cut in December, acknowledging that labour-market conditions were easing and that downside risks to growth had risen even as inflation pressures subsided. Markets interpreted this as a clear signal that the Fed was prepared to act pre-emptively to avoid an overly restrictive policy stance. Rate-cut expectations rose sharply, with the probability of a 0.25% reduction in December climbing to around 90% by month-end.
The improving policy outlook helped reinvigorate sentiment toward the technology sector. Nvidia’s eagerly awaited earnings update was exceptional, highlighting strong demand for AI-related computing and easing concern about the durability of the global AI investment cycle. Alphabet also delivered a supportive update, reinforcing confidence in the broader technology backdrop and helping quell fears of a slowdown in the sector. Together, these developments contributed to the late-month rebound in risk appetite. Even with this recovery, November ultimately served as a consolidation phase for US and global equities after their strong run earlier in the year.
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Australian economy
Australian equities had performed strongly since the April lows but took a step back in November, with the ASX 200 falling 3% as domestic data revived concerns about inflation persistence and pushed expectations for Reserve Bank of Australia easing further into the future. The key macro development was the September-quarter consumer price index, which came in hotter than expected. Headline inflation rose 1.3% over the quarter and 3.2% year-on-year, while the RBA’s preferred trimmed-mean measure increased to 3.0% from 2.7% in June—the first rise in core inflation since 2022.
A closer look at the quarterly inflation profile highlighted several sources of stickiness. Housing-related costs, including rents and construction, remained firm; insurance premiums and a range of services categories continued to rise at elevated rates; and tradables inflation showed less disinflation than expected. The RBA had forecast core inflation to rise only 0.6% in the quarter, making the actual 1.0% result a significant surprise to policymakers and markets alike.
This outcome effectively ruled out the possibility of a Melbourne Cup Day rate cut and led investors to reassess the likelihood of policy easing across 2025 and into 2026. The RBA held the cash rate steady and emphasised that inflation remained too persistent for near-term reductions, noting that clear evidence of sustained progress toward the 2–3% target band would be required before easing could be considered. Labour-market data remained surprisingly resilient, with unemployment falling to 4.3%, further lowering the near-term case for monetary easing.
Corporate updates during the month were mixed, reflecting a still uneven domestic environment. Resource-linked sectors came under pressure from softer commodity sentiment, while consumer-facing industries continued to see cautious spending patterns. Even so, the Australian economy remains supported by relatively stable employment and strong migration flows, and recent quarterly GDP data has confirmed this resilience: the economy grew 0.4% in the September quarter and 2.1% over the year, the fastest annual pace in more than two years. A lift in private investment, including data centre and infrastructure projects, also contributed positively to growth.
NZ economy
The NZX 50 eased 0.4% in November, although the broader economic picture was more encouraging than the headline equity performance suggested. The defining event was the Reserve Bank of New Zealand’s decision to cut the Official Cash Rate by 25 basis points to 2.25%, the lowest level in three years. Markets initially viewed the move as a potential “one and done,” largely because the RBNZ’s updated projections showed the OCR remaining near current levels through 2026. However, the Bank’s tone indicated that further easing remained possible should conditions warrant it.
The RBNZ highlighted that domestic demand remains subdued, capacity pressures have eased significantly, and price-setting behaviour is normalising. While headline inflation has moderated to the top of the 1-3% target band, core inflation continues to decline steadily. The labour market has softened further, with the September-quarter unemployment rate rising to 5.3% and forward indicators pointing to continued easing.
Economic data through November supported the view that New Zealand is entering a transition phase. Business confidence surged to an 11-year high, with firms reporting improved expectations for activity, profitability and hiring. Manufacturing expanded for a fourth consecutive month, with rising new orders and production indicating early signs of a cyclical upturn. Retail spending volumes increased 1.9% in the September quarter, the strongest in nearly three years, with gains recorded across most major regions. Consumer confidence also improved from deeply depressed levels, helped by falling mortgage rates and stabilising house prices.
The housing and construction sectors showed further signs of stabilisation, with building consents rising for several consecutive months and house prices recording modest month-on-month gains. Export-focused industries remained relatively resilient, supported by a competitive currency and firm demand across meat, horticulture and manufactured products. While dairy prices have softened, markets are already looking ahead to the large Fonterra capital distribution scheduled for 2026, which is expected to provide a meaningful boost to rural and regional economies.
Looking ahead
As markets enter the final month of the year, the outlook will be shaped primarily by the path of global interest rates, the durability of economic growth, and the evolution of the current investment cycle. The U.S. Federal Reserve’s December meeting remains a key focal point, with markets expecting another rate cut and monitoring closely for guidance on the policy trajectory through 2026. The release of delayed data following the end of the U.S. shutdown will provide further clarity on the underlying momentum of the world’s largest economy. Globally, economic activity has cooled but remains far from recessionary, with manufacturing stabilising in several regions and services activity holding up.
China’s subdued activity highlights the need for additional policy support, while Japan’s gradual shift toward normalising monetary policy after decades of ultra-easy settings remains an important regional development. Corporate earnings trends continue to underpin market sentiment, supported by strong investment in technology, digital infrastructure and industrial capacity.
Australia enters the coming months with a backdrop of resilience. Employment remains firm, as does the housing market, and commodity demand is still providing a buffer, though the recent lift in inflation has lowered the likelihood of further RBA easing.
In New Zealand, the economy appears to be shifting from contraction toward stabilisation, with clearer “green shoots” emerging across construction, spending, and business activity. While the recovery is still in its early stages and uneven across sectors, the combination of lower interest rates, improved confidence and a firmer housing outlook provides a constructive backdrop heading into 2026.