Market Quote: U.S. Thanksgiving, Oil, Growth vs. Value
Author: The editor's desk
November 24, 2023
Members of AGF’s Investment Management Team weigh in on the week that was in global financial markets.
Equity markets were relatively quiet leading into the U.S. Thanksgiving Day weekend. In typical fashion, trading volume was lower and volatility was more muted than it’s been for much of the year, but we expect activity to rev back up next week.
There was a cooling off this week in several of the underlying performance trends that have highlighted the rally in global equity markets this month, including the outperformance of small capitalization stocks over large ones as well as high beta stocks over low beta names.
Meanwhile, expectations for lower rates on the back of falling inflation was reflected in the outperformance of growth stocks over their value counterparts, and broader economic and geopolitical uncertainty led to a more muted risk sentiment overall.
As we move to year-end, we could see the trends of the past few weeks continue based on central bank easing expectations, but we remain vigilant to the prospect of rotations in these trends as we progress through the cycle.
“After touching levels as high as US$96 per barrel (bbl) in late September, the price of Brent crude oil has slid down below the US$80/bbl level. The reason? For one, the Israel-Hamas conflict is increasingly looking like it will remain geographically constrained, and two, new non-OPEC supply is set to come online during the first half of 2024.
Yet, the focus now firmly shifts to the upcoming OPEC meeting and what Saudi Arabia intends to do with production cuts. We believe it’s likely that cuts will be extended given the market does not appear to be on solid footing from a pricing perspective.
The announcement around the meeting being delayed by a week does make it seem like the cartel is mulling other options, including an increase in the magnitude of these cuts. While a deepening of the cuts would no doubt be supportive of pricing, there are concerns around how well they will be received by other OPEC members and whether the Saudi’s are willing to withstand the possible decline in their oil-linked economy’s GDP with such a move.”
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Commentary and data sourced from Bloomberg, Reuters and other news sources unless otherwise noted. The commentaries contained herein are provided as a general source of information based on information available as of November 23, 2023 and are not intended to be comprehensive investment advice applicable to the circumstances of the individual. Every effort has been made to ensure accuracy in these commentaries at the time of publication, however, accuracy cannot be guaranteed. Market conditions may change and AGF Investments accepts no responsibility for individual investment decisions arising from the use or reliance on the information contained here.
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