Market Insights
Australian equity markets declined in November, with the S&P/ASX 200 falling 2.7%, underperforming most developed markets. Domestic sentiment was weighed down by a stronger-than-expected inflation print, which prompted a reassessment of the interest-rate outlook.
The introduction of the new monthly CPI series saw headline inflation print at 3.8% y/y, reinforcing concerns that inflation (particularly in services) remains more persistent than anticipated. With unemployment holding around 4.3%, markets are paring back expectations for further rate cuts, with policy now expected to remain restrictive for longer. There is even discussion emerging of rate hikes in 2026.
Performance was marked by sharp sector divergence. Healthcare (+2%) and Materials (+1.7%) were the best-performing sectors, supported by positive AGM updates and continued strength in gold-exposed stocks. In contrast, Information Technology (-11.6%), Financials (-6.5%), and REITs (-3.8%) lagged, as higher rate expectations and valuation sensitivity weighed heavily on duration-exposed assets.
Beneath the index, leadership continued to rotate. Small and mid-cap stocks again showed relative resilience, with the ASX Mid-Cap 50 the only major index to finish the month higher, while the ASX20 was the weakest performer. We believe this reflected both more attractive valuation starting points and increased investor focus on company-specific fundamentals amid macro uncertainty.
M&A activity remained a notable feature despite weaker markets. November saw continued interest across infrastructure and logistics assets, including bids for Qube and National Storage REIT, highlighting the growing disconnect between public market valuations and private capital’s assessment of long-term asset value.
Globally, November was characterised more by cooling momentum than outright risk aversion. Importantly, Fed communication has been less about committing to rapid cuts and more about watching the data, particularly around inflation and the labour market.
Europe remained subdued but stable. Inflation is continuing to moderate (including lower services inflation), and the ECB’s tone has been consistent with a wait-and-see stance.
Japan has continued to stand out as a relative bright spot, supported by earnings momentum and governance reforms. Meanwhile. China remains mixed with targeted policy support helping at the margin, but property-related weakness is still a meaningful headwind to confidence and activity.
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