Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
Graphic: World FX rates http://tmsnrt.rs/2egbfVh
LONDON, Nov 30 (Reuters) - World equity markets rallied
on Wednesday lifted by hopes that inflation is peaking and a
re-opening of China's economy is near, with focus turning to
U.S. Federal Reserve chief Jerome Powell who speaks later in the
The pan-European STOXX 600 index rallied 0.7%
higher after three straight sessions in the red, while U.S.
stock futures pointed to a firm open for Wall Street
Data showed euro zone inflation eased far more than
expected in November, raising hopes that sky-high price growth
is now past its peak and
bolstering the case
for a slowdown in European Central Bank rate hikes next
A Santa rally appeared to come early for some markets,
with Asian shares set for their strongest month since 1998 and
emerging market stocks poised for their biggest monthly surge
But the dollar, hit by expectations that a peak in U.S.
interest rates is near, was set for its biggest monthly loss in
more than 20 years.
Fed chief Powell will speak on the economy at the Brookings
Institution in Washington later. These are likely to be his last
public comments on monetary policy ahead of the blackout period
before the Fed's Dec 13-14 meeting.
"I'm not sure if markets are looking for a pivot but we
think he will stress the Fed is nowhere near the end of its
tightening cycle," said James Rossiter, head of global macro
strategy at TD Securities in London.
Investors looked past disappointing business activity
data from China and an escalation of protests in some parts of
the country over stringent COVID-19 lockdowns, pinning hopes
instead on a quicker reopening of the world's No.2 economy.
MSCI's broadest gauge of Asia Pacific stocks outside Japan
rallied more than 1% to its highest since
September. It was set for its best month since 1998.
Hong Kong's Hang Seng Index rallied more than 2%,
although Japan's blue-chip Nikkei fell 0.2%.
Investors appeared to view protests in China as a catalyst
for the economy opening up again after stringent COVID lockdown
moods. Chinese officials on Tuesday said the country would speed
up COVID-19 vaccinations for elderly people.
"Markets are cheering the fact that the government is close
to pivoting on COVID-19," Raphaël Gallardo, chief economist at
Carmignac said in a webinar on the firm's 2023 outlook.
"We can say with confidence that a reopening is coming
but it's because the authorities will be overwhelmed with the
number of (COVID) cases in the coming months."
Hopes for a China reopening alongside an expectation that
inflation and central bank interest rates may be close to
peaking meant that November looks set to end as great month for
China property stocks are up 70% this month, poised for
their best ever month. They had dropped over 80% since start of
And a rally in emerging markets was in full swing, with
MSCI's emerging market stock index up around 14% in November and
set for its best month since May 2009 and.
Optimism that demand from China will improve also helped
lift Brent crude futures up 2.5% to $85.09 per barrel.
U.S. West Texas Intermediate crude futures climbed 1.78%
to almost $80 per barrel.
Signs that U.S. inflation is peaking, meaning the Fed can
slow the pace of its aggressive rate hikes, has boosted
government bond markets but dented the robust dollar.
The yield on the U.S. 10-year Treasury yield was down 2.5
basis points at around 3.72% and has fallen over 30
bps this month - set for its biggest monthly drop since March
"Even if the surprise slowdown in inflation is good news, it
is only the first in a long series of conditions the Fed needs
to see before it pauses its hiking cycle," said ING senior rates
strategist Antoine Bouvet.
"Longer-term, the direction of travel is indeed towards
lower inflation and an end to this tightening cycle but we
expect the Fed to take Fed Funds rates some 100 bps higher than
currently, just under 5%, before this is the case."
The U.S. dollar index, which measures the performance
of the greenback against six major currencies, fell 0.4% to
It has lost around 4.5% in November, making this its biggest
one-month drop since 2010.
The euro was up 0.3% at $1.0363, while sterling
was 0.5% firmer at $1.2016.
(Reporting by Dhara Ranasinghe; additional reporting by Kane Wu
in Hong Kong and Marc Jones and Amanda Cooper in London, Editing
by Jane Merriman and Chizu Nomiyama)