In November, global stock market rallied driven by the bullish outlook of China reopening and lower than expected inflation data in US. SP500 rallied by 5.4% to 4080. DAX increased by 8.6% to 14397. China market outperformed due to the rising expectation on clearer path to remove Covid Zero policy. HSI surged by 26.6% to 18597 while SHCOMP rallied by 8.9% to 3151. Commodity prices recovered as well. Copper price rose by 10.6% to $8329. Zinc increased by 12.6% to $3038. Aluminum price gained for the consecutive month, up by 11.5% to $2478. Gold price also benefited from peaking inflation, went up by 8.3% to $1769. Oil price underperformed by slumping 6.9% to $80.55.
Global economy continued to weaken as global PMI declined further to 48.8 from 49.4. Developed economies still underperformed emerging economies. By regions, US PMI dropped sharply to 49.0 from 50.2. Fell below expansion line for the first time since Jun 2020. Eurozone PMI slightly rebounded to 47.1 from 46.4. China PMI corrected further to 48.0 from 49.2 due to still tight pandemic control during November. On the other hand, inflation continued to rise in Europe while fell in US. Headline CPI rose further to 10.6% in Europe while declined to 7.7% in US. Central banks continued to tighten policies though no more ahead of market expectation. Federal Reserve raised interest rate by another 75bps in November and signaled slower pace of tightening but higher peak. Dollar trended down along with falling inflation and improving outlook of China demand.
For the outlook of December, market volatility should persist given the intensive central bank policy decisions and overall weak demand. US economy starts slowing down in a faster pace due to weaker exports and property industry despite healthy consumption demand. European economy may continue to face pressure but step down in a milder magnitude thanks to the easing supply bottleneck. Real demand in China remains weak due to surging omicron cases, nonetheless, the government will continue to loosen policies to cushion the downside risk.