From Tokyo in Japan to New York in the US, from Frankfurt in Germany to Buenos Aires in Argentina, for investors in the global market, the November market with only the last few trading days left can obviously be described as “bullish” in advance...

Markets in China, Latin America, and other regions all rebounded in November, bringing the MSCI Global Stock Index, which represents the global stock market, to its best monthly performance in more than three years!

According to FactSet data, the MSCI Global Stock Index has accumulated a cumulative increase of more than 8% since November, and is expected to record the best monthly performance after surging 15% in November 2020. The index covers stocks of nearly 3,000 companies from 23 developed countries and 25 emerging markets.

Stock indexes in major regions around the world generally performed well during the rebound in November. In the US market, the three major stock indexes have now been rising for four consecutive weeks, and are expected to record their best monthly performance in over a year. The major stock indexes rose 9-13% from their lows at the end of October, respectively.

The Nikkei 225 Index has soared 8.9% so far in November, and is expected to achieve its best monthly performance in three years. This week, it once again reached a new high of over 33 years in this week's session. As Berkshire, a subsidiary of stock god Buffett, issued Japanese yen bonds for the second time this year, many Japanese stock bulls are making a fool of themselves right now.

The European stock market also ushered in its best monthly performance since November 2022. The Stoxx 600 Index has risen more than 6% since November. The MSCI ACWI Global Index (excluding the US), which tracks global markets other than the US, has also risen 8.1% since November. Stocks trading in Japan and the UK account for the most weight in the index.

Optimism has even spread to some markets that did not perform well in previous months, such as US small-cap stocks and China's A-shares.

According to FactSet data, the Shanghai Composite Index has declined in five of the past seven months, but has rebounded by about 0.7% since November.

Stock markets in emerging markets other than China have increased even more. Part of the rise is related to the weakening of the US dollar and the preparations of some central banks to begin a cycle of interest rate cuts. According to market data, the iShares MSCI Emerging Markets ETF has risen 7.7% so far this month, which is expected to record the best monthly performance in a year.

Large amounts of capital are beginning to pour into the global market

Although 2023 has undoubtedly been a year where the global stock market has performed well so far, it actually experienced a long period of fall downturn before the global market surged this month. So, what is driving the market to re-energize now?

Stock market analysts have given some answers, most of which relate to the Fed and interest rate expectations. The decline in treasury bond yields has also helped boost demand for stocks.

Steve Sosnick, chief market strategist at Interactive Brokers, attributed the strong performance of global stock markets to weakening concerns about the situation in Gaza, expectations of the Fed's shift, and the natural reaction of the stock market being oversold after falling for three consecutive months.

“We entered November after three months of continuous decline, so it is only reasonable for the stock market to rebound at the beginning of this season's positive season. Furthermore, after the Federal Open Market Committee (FOMC) and Federal Reserve Chairman Powell made moderate remarks, and employment pressure showed signs of easing, the market believes that the Fed has ended interest rate hikes and is more likely to cut interest rates in 2024,” Sosnick said.

Sosnic also pointed out that the situation in Gaza has not spread further, and that China is taking action to resolve the real estate dilemma, these are all factors that strengthen investors' confidence in the global stock market.

According to analysis by Jim Reid, research strategist at Deutsche Bank (Deutsche Bank), the number of central banks cutting interest rates worldwide this month is expected to surpass that of central banks that have raised interest rates for the second month in a row, and the previous similar situation dates back to January 2021.

A set of data shows that investors are pouring into the stock market at the fastest rate in the past two years as betting on peaking interest rates heats up.

Bank of America strategist Michael Hartnett quoted data from EPFR Global and wrote in the report that in the two weeks ending November 21, about 40 billion US dollars flowed into global equity funds, the highest level since February 2022.

Hartnett said that the improvement in the magnitude of the increase, combined with the increase in capital inflows to the stock market and high-yield bonds and emerging market bonds, meant that Bank of America's customized bull-bear indicators no longer sent a negative buying signal. Despite this, Bank of America's own quantitative strategists, led by Savita Subramanian, are in the bullish camp because they expect US companies to have adapted to higher interest rates and weathered macroeconomic shocks.

Other market strategists are increasingly optimistic about the outlook for the US stock market, and teams, including Royal Bank of Canada Capital Markets, predict that the S&P 500 index will reach a record high in 2024.

edit/emily