Daily Briefing: Global stocks set to clock up another record

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.