Stocks retain their November lead, while OPEC worries hurt oil prices

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World shares are on track for their best month since the COVID vaccine breakthroughs of late 2020. On Thursday, Europe digested the results of another far-right election shock, while oil prices dipped after OPEC+ postponed its weekend meeting. Traders were taking positions ahead of the annual U.S. Thanksgiving holiday, which is expected to reduce trading volumes. Despite this, there was plenty to keep traders busy, including slightly stronger than expected German and French inflation data. This nudged both the euro and bond yields higher, but Sweden’s crown dropped as its central bank left rates on hold. Dutch bank stocks also fell after anti-EU far-right populist Geert Wilders scored a huge election win.


The PMI in Germany beat expectations, but Close Brothers Asset Management chief investment officer Robert Alster warned that it “was not enough to say we have turned the corner on the economy,” adding that activity had still contracted. The win for the right in Holland is a genuine surprise, but Alster suspects that 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 European Union 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.


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. However, Chinese real estate stocks jumped 3% on reports that debt-laden Country Garden would be on a list of developers receiving support. Meanwhile, a large wealth manager with heavy exposure to the property market disclosed that it faces insolvency with relevant liabilities of up to $64 billion.


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 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, this is the best showing since November 2020 when markets got a major shot in the arm from COVID vaccine hopes.


Germany’s 10-year bund, the benchmark for Europe, was fractionally higher on the day at 2.57%, having touched 3% last month. Ten-year U.S. Treasury yields were little changed at 4.4%. The euro’s bounce pushed the dollar index back down towards a 2-1/2 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 U.S. WTI down 1.4% to $80.70 and $76.03 per barrel on expectations that the group might 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 U.S. anti-money laundering laws as part of a $4 billion settlement. On Thursday, Bitcoin fell by 0.77% to $37,337 after rising nearly 5% on Wednesday.

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