Global shares head for best month since late 2020

London — World shares inched closer to their best month since the Covid-19 vaccine breakthroughs of late 2020 on Thursday, as Europe digested another far-right election shock and oil dipped after Opec+ postponed its weekend meeting.

Traders were getting their moves in before the annual US Thanksgiving holiday scythes volumes later but there was plenty to keep them busy while they did it.

Slightly stronger-than-expected German and French inflation data nudged the euro and bond yields higher, Sweden’s krona dropped as its central bank left rates on hold while Dutch bank stocks fell after anti-EU far-right populist Geert Wilders scored a huge election win.

The PMI in Germany beat expectations but was “not enough to say we have turned the corner on the economy,” said Close Brothers Asset Management chief investment officer Robert Alster, adding that activity had still contracted.

“Holland is a genuine surprise as a win for the right, but I suspect the market will wait to see what happens in terms of a coalition.”

A fan of Hungary’s Eurosceptic Prime Minister Viktor Orban, the vocally anti-Islam Wilders has vowed to halt all immigration, slash Dutch payments to the EU and block the entrance of any new members, including Ukraine.

Beating all predictions, his Freedom Party (PVV) won 37 seats out of 150, well ahead of 25 for a joint Labour/Green ticket and 24 for the conservative People’s Party for Freedom and Democracy (VVD) of outgoing Prime Minister Mark Rutte.

ECB minutes in focus

For traders, the next thing to watch will be the minutes of the European Central Bank’s most recent meeting and an interest-rate decision in Turkey where the central bank is expected to maintain its rapid run of interest-rate hikes

In Asia, the focus was on China where there were more signs of support for the long-suffering property market.

MSCI’s broadest index of Asia-Pacific shares outside Japan ended little changed in thin trading, with Japan also on holiday, although Chinese real-estate stocks jumped 3% on reports debt-laden Country Garden would be on a list of developers getting support.

Meanwhile, a large wealth manager with heavy exposure to the property market disclosed that it faced insolvency with relevant liabilities of up to $64bn.

Chinese government advisers will recommend to an annual policymakers’ meeting that economic growth targets for next year be set at 4.5% to 5.5%, Reuters had reported on Wednesday.

Wall Street’s benchmark S&P 500 is nearing a fresh high for 2023, with the S&P 500 and MSCI’s all-country world index both up more than 8% this month alone. For MSCI world that is the best showing since November 2020 when markets got a major shot in the arm from Covid-19 vaccine hopes.

Germany’s 10-year bund, the benchmark for the Europe, was fractionally higher on the day at 2.57% having touched 3% last month. Ten-year US treasury yields were little changed at 4.4%.

The euro’s bounce pushed the dollar index back down towards a two-and-a-half month low having moved away from it on Wednesday after the number of Americans filing new claims for unemployment benefits fell more than expected.

Sterling also recovered from a knock it had taken on Wednesday when UK finance minister Jeremy Hunt unveiled a string of tax cuts in his autumn budget, but also forecast a far more sluggish economic outlook than previously expected.

In commodity markets, news that Opec+ postponed a weekend meeting sent both Brent and US WTI down 1.4% to $80.70 and $76.03 per barrel, on expectations it might see the group cut output less than anticipated.

In cryptocurrencies, buyers were still digesting the news of Binance chief Changpeng Zhao stepping down and pleading guilty to violations of US anti-money-laundering laws as part of a $4bn settlement.

Bitcoin fell 0.77% on Thursday to $37,337 after it rose nearly 5% on Wednesday.

Reuters