US stocks had the first streak of back-to-back monthly gains since 2021, with a gradual upward trend punctuated with a sharp rally on the last day of November.
Wall Street’s benchmark S&P 500 closed 3.1 per cent higher on Wednesday, bringing gains in November to 5.4 per cent. The tech-heavy Nasdaq Composite index added 4.4 per cent on the day and also rose a total of 4.4 per cent this month. The indices climbed 8 per cent and 3.9 per cent in October, respectively.
Wednesday’s strong performance came after a speech from Federal Reserve chair Jay Powell in which he suggested that it may be appropriate to slow the pace of interest rate increases.
Powell suggested that the US central bank is preparing to raise its benchmark rate by 0.5 percentage points when its monetary policy committee gathers in December, after a string of 0.75-point increases.
But he also said that the Fed has “more ground to cover” in tightening monetary policy and cautioned against reading too much into the latest US inflation report, which earlier this month undershot expectations for the first time in months.
In a discussion after the speech, he added that he believes there “is a path to a softish landing” in which labour markets cool but the economy does not enter a recession.
The yield on the two-year Treasury note, which moves with interest rate expectations, fell 0.12 percentage points to 4.35 per cent, while investors in the futures market raised expectations of interest rate cuts by the end of 2023.
Powell’s remarks followed government data released earlier on Wednesday that showed a decline in job openings in October, indicating that this year’s monetary tightening has slowed down the labour market.
Global stocks have rallied in recent weeks as investors bet that policymakers will get inflation under control, with the FTSE All-World index rising 10 per cent since the start of October, erasing some of the steep losses inflicted earlier in 2022.
The MSCI Asia-Pacific index rose 13.9 per cent in November, its biggest 30-day gain in 24 years, Bloomberg data show.
Commodities prices, factory gate prices and inflation expectations have all begun to slide from their record levels in recent weeks, suggesting to some that the pace of headline price growth is set to slow in 2023.
Declining energy prices helped annual eurozone inflation fall more than expected to 10 per cent in November, down from a record 10.6 per cent in October, according to data released on Wednesday. Economists polled by Reuters had predicted a 10.4 per cent rise.
European stocks rose on Wednesday, with the regional Stoxx Europe 600 up 0.6 per cent and London’s FTSE 100 gaining 0.8 per cent.
In Asia, Hong Kong’s Hang Seng index gained 2.2 per cent after rising sharply in the previous session, as investors bet that China would push ahead with reopening plans following anti-lockdown protests. China’s CSI 300 added 0.1 per cent.
