LONDON (Reuters) - Unlucky for some? Despite another overnight Wall St wobble involving a rotation from high-flying tech stocks to financials, the world’s broadest equity gauge – the MSCI all-country index – is on course to finish November with its 13th straight monthly gain – the longest such winning streak in the index’s 30-year history.
Whether Wednesday’s more than 1 percent drop in the tech-heavy Nasdaq and pullback in the much celebrated FAANGs – Facebook, Apple, Amazon, Netflix and Google parent Alphabet – marks some sort of high watermark remains to be seen, though the tendency to rotate to other sectors is testament to the strength of the underlying economic numbers coming through nearly everywhere across the developed world.
Yet again, numbers on Wednesday showed euro zone business and consumer confidence hitting their highest since the turn of the millennium, U.S. third-quarter GDP was revised higher to 3.3 percent annualised and Chinese November business surveys released earlier showed sentiment gauges accelerating beyond forecasts.
Is this sort of growth finally generating some inflation that will make the central banks sit up and take notice? Germany’s higher-than expected inflation November inflation certainly spooked the world’s fixed income markets.
Perhaps supporting this week’s switch to financials – that started after Federal Reserve chair nominee Powell delivered a relatively soft line on financial regulation on Tuesday - sovereign bond markets have snarled up on the German inflation news and the steady drumbeat of economic surprises elsewhere and appear to be finally taking notice of the sort of global expansion the equity markets have been feeding off all year.
Ten-year German bund and 10-year Treasury yields staged their biggest one-day jump in about three weeks, with the U.S. 2-10 year yield curve actually steepening back above 60 basis points. Overall euro zone flash inflation numbers are due for release later. But the underlying global bias is toward monetary tightening. The South Korean central bank hiked interest rates on Wednesday for the first time in six years.
The constellation of the tech shakeout and bond and yield curve shifts stateside, which have supported the dollar broadly this week, saw Asia bourses slip lower early on Thursday. HK and Seoul indices were down more than 1 percent, with Shanghai in the red too. HK-listed Tencent fell 2 percent. Japan’s Nikkei outperformed and closed higher as dollar yen jumped back above $112.
Positive soundings about a breakthrough in the Brexit negotiations next month at the EU summit on Dec 13-14 continued to lift the pound, which has risen to just shy of $1.35 for the first time since September. Sterling has also firmed to a three-week high against the euro.
A deal on the financial settlement between the UK and the EU looks to be in the offing as the British government accedes to Brussels' demands and newspaper reports on Thursday also said there may be movement on the other thorny issue of what happens with the Irish border after Brexit.
The unfathomable rise of Bitcoin, which rocketed to more than $11,000 on Wednesday, has turned into wild swings – traversing $1,000 up and down over 12 hours periods. It was last back down to $10,200, with no particular news or driver behind it either way.
Brent crude oil was slightly firmer as OPEC ministers meet today in Vienna.
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Writing by Mike Dolan; Editing by Gareth Jones