A ceasefire between Israel and Palestine, and signs that inflation is coming under control boosted global share markets in November. The benchmark All-Ordinaries index recouped some recent falls, gaining by 4.0% in November, to close the month at 7,245.8 points.
Global share markets were generally stronger in the month, with the United States Dow Jones Index gaining 8.8%, the London FTSE gaining 1.8%, the Hong Kong Hang Seng Index falling 0.4% and the Japan Nikkei 225 gaining by 8.5% for November.
As widely expected, the Reserve Bank of Australia (RBA) Board increased the official Cash Rate by 0.25% per annum to 4.35% per annum at its November Board Meeting. As annual inflation in Australia fell to 4.90% in October from 5.60% in September, markets do not expect a further increase to the Cash Rate at the final RBA Board meeting for the year next week.
Globally, there are good signs that inflation is under control as shown in the chart below.
Inflation for the 20 countries using the Euro currency fell to 2.90% in October, marking a significant reduction from the peak inflation rate of 10.60% in October last year (as an energy crisis left Europe’s households and businesses struggling to make ends meet).
In the United States’ it is a similar story, with the annual inflation rate slowing to 3.20% in October, down from 3.70% in both September and August, and below market forecasts of 3.30%.
Bond markets in the Eurozone and the United States now appear to be “pricing in” interest rate cuts in 2024. If this eventuates, it will be positive for investment markets – especially if the so called “soft landing” for the global economy from high inflation can be achieved.
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