On Thursday, 10th of November, the US stock indices saw the largest one-day rally in two and half years after the release of the Labor Department’s consumer inflation data for the month of October. The strong gains across the global stock market recorded as investors celebrated reassuring inflation data and falling bond yields.
Let us highlight some of the major movements of the last week:
- The headline CPI (Consumer Price Index) grew 0.4% in October and it brought the YOY (year-over-year) increase to 7.7%.
- The core inflation fell back from a 40-year high of 6.6%(sep’22) to 6.3% in October.
- The tech-heavy index NASDAQ topped the chart with a weekly gain of more than 8%, the S&P 500 index advanced around 6% and the Dow Jones Industrial Average Index rose about 4% over the last week.
- In the wake of the released lower-than-expected CPI data, the U.S. treasury yields fell sharply. The benchmark 10-yr. US Treasury note yield closed at 3.81% (from 4.17% of previous week) on Thursday 17th Nov as on Friday U.S. bond markets were closed for the Veterans Day holiday.
- Shares in Europe also replicated the positive rally and the pan-European STOXX 600 ended the week higher at 3.66%.
- Germany’s DAX index, Italy’s FTSE MIB and France’s CAC 40 index advanced 5.68%, 5.04% and 2.78% respectively. However, FTSE 100 index of the UK fell 0.23% in the wake of data showing poor economic growth in the country.
- The Nikkei 225 index and the broader TOPIX rose over the week in Japan by 3.9% and 3.3% respectively, in the expectation of a dovish monetary policy stance from the US federal reserve.
- Japanese currency Yen gained strength and it closed at 139.4 against the US dollar from the previous 146.6. Meanwhile, the yield on the 10-yr. Japanese Govt. bond fell to 0.23% from 0.25%.
- Signs of economic fragility in China prevented its market from replicating gains and the Shanghai Composite Index grew only 0.54% over the week.
- Indication of some relaxation in China’s Zero-Covid policy and news about easing in travel restrictions helped the market and boosted the sentiments among investors towards the end of the week.
- However, for the first time in two years, China’s export fell 0.3% in October and on the other hand, imports also fell by 0.7% because of the weak domestic demand.
- Last week remained extremely volatile for the Cryptocurrency market after a crypto trading platform company filed for bankruptcy protection.
- The most widely traded, Bitcoin, reached less than USD 17,000 on Friday from the high of USD 21,000 (on 4th Nov’22). It is worth noting here that in November 2021, Bitcoin cryptocurrency briefly traded above a record of USD 68,000.
Producer Price Index by the U.S. Bureau of Labor statistics and data on US retail sales by US Census Bureau are scheduled to be released this week and can trigger the market and investors sentiment.
We will come back with more updates soon.