Nasdaq and S&P 500 rebounded sharply, with Europe markets also following. China markets suffer.

Why you should care: Global markets have been down for the past 3 months. This month’s development provides a sense of optimism in the markets where we need to determine the main driving factors. Recession concerns seemed to have calmed down hence, as an investor, you would need to time your entry into the markets to take advantage of relatively low valuations.

U.S.: Sharp rebound as inflation concerns subside.

Whew. And here I thought the U.S. markets were still on a freefall after three months. This month, both the Nasdaq and S&P 500 markets rose by 10.7% and 8.9% respectively, driven by the technology (+11.8%), financials (+10.7%), real estate (+10.5%) and consumer discretionary (+10.1%) sectors. Two events are important this month. One, the Federal Reserve paused its rate hikes and maintained its interest rates at 5.75%. Two, inflation came in lower-than-expected at 3.2% (consensus: 3.3%).

Markets were generally happy with these developments as it meant that the central bank would not be raising interest rates anymore. Higher interest rates normally lead to lower economic activity and indirectly lower corporate earnings. And central bank increases interest rates to bring inflation down. While inflation is still above the 2% target, investors are kind of expecting the current interest rate at 5.75% to be enough to bring inflation to the target of 2.0%.

So, what should you be looking out for? For one, the next inflation data for November 2023 is coming out on 12 December 2023. If it comes out lower than expected, that’s good news.

Europe: Followed suit with the United States

Similar to the U.S. markets, The Euro Stoxx 50 rose by 7.9% driven by tech companies such as Ayden NV (+63.7%), Infineon (+26.8%), Siemens (+22.1%) and Prosus (+12.5%). Inflation in Europe has also moderated to 2.4% in November 2023 from 2.9% in October 2023 and is closer than the U.S. to a target of 2.0%. What you should look out for? Developments in the Russia-Ukraine conflict are quite key to Europe’s fortunes and inflation battle. If the conflict escalates, you better take note of the impact on commodity markets.

China: Not much can be done about it currently.

China just can’t take a break. This is the 4th consecutive month that the Hang Seng China Enterprise Index has declined. And the sentiment on the ground is still pretty bad. One, consumers are saving, not spending. Two, the property sector is still quite down. Three, the government announced measures to support the economy but it doesn’t seem to be effective. So, what do you do? Nothing much at this point. Pay close attention to the numbers that are coming out. Retail sales did come out stronger than expected, so that’s positive for now.