2020’s Santa Claus rally got a head start this year

The Santa Claus rally got a head start this year in the wake of the US election; both the S&P 500 and the S&P/TSX gaining 10% and 13% respectively. Even global equities reached an all-time high, with the MSCI posting a 10% y/y return, coming back over 57% from its March low. November marked the TSX making its way into positive territory for 2020, meanwhile the Dow crossed an historic 30,000 level for the first time and the S&P 500 also scaled to new heights. Another positive development was the announcement regarding a vaccine, giving investors even more confidence, but more importantly many strategists and economists began raising their Q4 estimates, with the U.S. Q4 GDP now expected to rise at a sturdy 5% clip, and a call for 2021 GDP of +4 %. All this positivity points to the confidence investors have in the current state of the global economy, despite the gloom and doom of the press and the ongoing fear around COVID-19.

The price of oil caught a break too, jumping over the $45 USD p/barrel, a level not seen since the pandemic began. Commodities in general are up nicely with the Bank of Canada’s non-energy commodity price index up 12% y/y and the price of copper up a whopping 23% y/y. Gold was down over the month, from $1,892 to $1,782 as the ‘risk on’ trade sends the precious metal in retreat, taking a back seat to the seemingly endless catch up trade for equities in general.

Speaking of catch up trades, the banks finally caught a bid in the second half of November, with all the major Canadian banks posting solid gains, i.e. BMO moving up almost $18 at one point during the month, as fears of loan loss provisions subside and another round of positive quarterly results cause investors to take a second look.

To receive our full market commentary for November 2020, please contact us.