#MarketingCommunication

The global equity markets recorded a second strong month in a row, with developed market equities gaining more than 7.5% in November. Inflation showed some signs of easing globally, increasing the potential for a slowing in the central banks’ interest rate hikes. China also took measures to soften its COVID-19 lockdown policies, which have weighed on economic activity over the past year - this sent emerging markets up more than 13% in the month. In fixed income, government bond yields moved lower, meaning prices rose.
In the US equities rose in November. Investors responded positively to data showing inflation had receded, and on the prospect that it will cool from here. During the month central banks did deliver another round of steep policy rate hikes. The Federal Reserve (Fed) raised policy rates by 75 basis points (0.75%) to 4.0%. However, despite headwinds from tighter monetary policy, investor sentiment improved significantly after the release of US inflation numbers for October. The 7.7% year-on-year increase was below analysts’ expectations, lifting the market’s hopes that US inflation has now peaked and could be less stubborn than initially feared, thus giving both stocks and bonds a boost. For now, the Fed is expected to continue to tighten its key policy rate but the central bank’s chair, Jerome Powell, did indicate that the pace of rate hikes will likely be less aggressive going forward. The prospect for less hawkish Fed policy caused the US dollar to fall sharply against most major currencies including the euro, UK pound, and yen. In such environment, all three major American equity indices rose 5%-6% in November. Although all sub-sectors gained, the rally in materials, real estate and industrials was among the strongest over the month. Healthcare and energy, two of the strongest sectors this year, along with consumer discretionary stocks chalked up weaker gains.  
The bond market also registered a strong month with yields in the US and Europe retreating significantly. Yields on 10- and 30-year U.S. Treasuries decreased more than the yields on two year U.S. government bonds, further inverting the yield curve and raising fears of a recession.
Inflation in the eurozone slowed in November for the first time in 17 months, decelerating in 14 of the bloc’s 19 member states. Yet, The Bank of England increased its benchmark interest rate by 75 basis points to 3.00% (the highest level since 2008), to contain surging inflation. Overall, European equity returns led the developed markets in November, on the signs that inflation may be slowing and that central banks might reduce the steps of policy tightening. The risk of running out of gas this winter has further diminished for Europe in recent weeks, thanks to relatively mild temperatures and reduced demand. At the end of the month, storage is at 93% of capacity. In local currency terms, the pan-European STOXX600 Index ended sharply higher (almost 7%). Major market indexes in Germany, Italy, France, and the UK also posted substantial gains.
The Bulgarian Stock Exchange also recorded gains in November, although not as pronounced as those on its international counterparts. All local indices ended the month with a monthly return of around 2%, which demonstrated the traditionally low correlation between the performance of international and Bulgarian stocks, and their diversification advantage.  Among domestic companies, the best performer was the venture capital fund Eleven Capital AD, whose price rose by more than 20% over the month, and the weakest performer was the industrial manufacturer Hydraulic Elements and Systems AD, whose share price fell by 11%.