Global Stock Market Insights: Central Bank Policies Drive Gains in US, Europe, & Asia
Global Stock Market Weekly Analysis (11 – 15 Dec 2023)
The global stock market indexes mostly closed higher this week. The US markets rallied to record highs, while European and Asian stock market indexes mostly closed on a positive note. The Central Bank’s policy and economic data were the main focus.
The US Stock Markets – Weekly Updates
The US stock market indexes recorded their seventh straight week of gains, their best winning streak since 2019. The S&P 500 index and Nasdaq ended at 52-week highs while the Dow Jones Industrial Average (DJIA) closed at an all-time high. All three indexes ended higher by at least 2.5% each during the week.
The sentiments seemed to be largely influenced by steady or slightly improved inflation data on Tuesday, in the eyes of both investors and policymakers. The CPI inflation came as per expectations and the core inflation was steady at 4%. The PPI inflation reported a modest downside surprise, with core inflation coming slightly below expectations and marking its lowest point since January 2021.
The stocks had the biggest move of the week on post-Federal Reserve’s dovish policy. Fed has acknowledged that inflation has declined fast and this has opened the room for more rate cuts in 2024.
The robust retail sales data on Thursday along with the cooling annual inflation reading in the early week have also boosted the market sentiments during the week, with the hope of strong economic recovery in 2024.
The 10-year U.S. Treasury yields fell sharply below 4% after the inflation data and Fed signals for the first time since the end of July.
European Stock Market Indexes- Weekly Updates
The pan-European Stoxx 600 index ended higher this week, gaining for the fifth straight week and recording its longest winning streak since April. The sentiments were positive, as investors hoped that the central banks would start reducing the interest rates in 2024. The key indices in the region France’s CAC and UK’s FTSE gained while Germany’s DAX and Italy’s FTSE MIB were slightly lower during the week.
The European Central Bank (ECB) kept the key rates unchanged as widely expected but cut its inflation and growth forecasts for 2023 and 2024. The central bank had put more stress on reducing the inflation for the set target than reducing the rates. The S&P Global flash PMI data showed eurozone manufacturing PMI remained at a six-month high in December, while the Services and Composite fell compared to the previous month.
The Bank of England also kept its benchmark interest rates steady for the third straight meeting. The official data showed the UK’s GDP shrank in October by 0.3% after reporting an expansion of 0.2% in September. The country’s GDP remains flat in the period of three months average July to October.
Asian Stock Markets Updates
The major Asian stock market indexes mostly closed higher this week. Indian stock markets closed higher for the seventh consecutive week. Japan and Hong Kong rebounded this week while China ended in the red. You can read about the Indian stock market updates here.
Japan’s Stock Market
Japan’s Nikkei rebounded this week, as the US Federal Reserve signaled that the monetary policy tightening cycle is over and more interest rate cuts will be there in 2024. On the economic front, December’s flash PMI data showed Japan’s private sector expanded slightly over the month, due to stronger services activity data which offset the contraction of manufacturing activity.
The BoJ quarterly “Tankan” survey showed growth among Japan’s large manufacturers. The upside was capped as investors are looking for a two-day monetary policy outcome on 19 December.
Chinese Stock Market
Chinese stock market index Shanghai continued its southward journey. Shanghai declined during the week due to concerns of persistent deflationary pressure on the economic outlook.
China’s CPI inflation fell 0.5% in November from the same period last year. The CPI inflation dropped more than October’s 0.2% fall and the steepest drop since November 2020. Meanwhile, the PPI dropped more than expected in November.
The other economic data released during the week showed a mixed picture of the country’s economy. Industrial production grew higher than expected in the last month from a year earlier, while retail sales for November surged but missed expectations.
Fixed asset investment rose at a lower than estimated in the first 11 months of the year as declines in infrastructure growth and real estate investment deepened. The urban unemployment rate remained steady in November from October
In Hong Kong, the Hang Seng Index closed higher following a global stock market rally after after Fed’s dovish signal.
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You may also like to read, US Markets Updates: Dow Jones, S&P 500 & Nasdaq Composite Index – 15 Dec 2023
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