Global Stock Market Weekly Analysis (30 Oct- 3 Nov 2023)

 

Global Stock Market Analysis 

 

The global stock market indices ended higher during the week. The world equity market indices gained, as the US central bank kept the interest rate unchanged and made dovish comments. The sentiments were also upbeat as the Treasury yields and crude oil prices declined.  The equity benchmarks in the US, Europe, and major indices in Asia ended higher during the week.

 

US Markets – Weekly Updates

 

The US stock market indices made a sharp gain during the week. The key US indices recorded their best weekly gain in nearly a year, as a slowing economy, unchanged interest rate, and dovish policy statement from the Fed declined the Treasury yields. Last week’s rally was broad-based, but growth and tech stocks performed well.

The quarterly earnings reported during the week did not have much impact on the US markets, as trader’s focus was mainly on Federal Reserve. The central bank left rates steady, as widely expected but investors were motivated post-meeting conference, which hinted that the Fed has done its aggressive policy tightening cycle. This caused a significant drop in long-term Treasury yields. 

Traders were waiting for the monthly Job report on Friday which showed that the unemployment rate reached the highest level since the beginning of 2022. The US markets got boosted as the job report confirmed that the labor market was cooling. The US economy added 150,000 jobs in October which is below expectations and lowest level since June.

 

European Stock Market- Weekly Updates

 

European stock markets rebounded from the previous week’s loss and closed higher this week. The major indexes in the region gained due to the expectations that interest rates may have peaked. 

Bank of England (BoE) kept the interest rate steady for the second consecutive meeting but hinted that the higher interest rate could stay for longer due to sticky inflation. Meanwhile, the UK’s housing markets remain weak as per BoE’s mortgage report.

Eurozone inflation fell sharply in October at 2.9% from 4.3% reported in September, its lowest level since July 2021 according to EU Statistics Office data. The sharp fall in inflation is due to a decline in energy and food prices. 

Eurozone GDP contracted 0.1% sequentially in the third quarter from 0.1% growth in the second quarter. Meanwhile, Germany’s unemployment rate came to a tick higher in October compared to the last month.

 

Asian Stock Markets Updates.

 

The Asian stock market indexes closed higher this week. The fall in US Treasury yields and dovish Fed and BoJ policy outcomes uplifted investors’ mood during the week. Indian stock market indices also closed higher, snapping a two-week losing streak. You can read about the Indian stock market updates here.

 

Japanese Stock Market

 

Japan’s Nikkei ended higher this week. Nikkei gained sharply after the Bank of Japan’s monetary policy updates. Despite the adjustments made by BoJ to its yield curve control framework, its monetary policy remained highly accommodative and boosted the market sentiments.

BoJ continued its ultra-loose monetary policy stance in October and unchanged the interest rate. However, the central bank tweaks monetary policy to allow yields to rise more freely and raises inflation forecasts to 2.8% above the target of 2%.

The Japanese government also announced a new fiscal stimulus package exceeding USD 110 billion to enhance economic growth and assist households in coping with the rising cost of living.

 

Chinese Stock Market

 

The Chinese stock markets gained due to the optimism that the US interest rates may have peaked and this offset the concern about the slowing economy of the world’s second-largest economy.

The economic data showed China’s manufacturing activity contracted in October, below expectations as production growth slowed. Meanwhile, the services activity was slightly higher than the previous month. New home sales by the country’s top 100 developers fell at a slower rate in October as compared to September.

In Hong Kong, the Hang Seng Index closed higher during the week. 

 

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