Earnings deliver, trade fears fade
Investors’ appetite for risk assets further increased in November, as improving activity indicators, a better than expected earnings season, and positive news flow on a US–China trade deal gave investors reason to feel optimistic.
The MSCI World Index returned 3.2% (in local currency) over the month, driven by the high growth IT and health sectors, while defensive utilities and real estate sectors retraced as global bond yields drifted higher.
Global activity indicators have generally stabilised over the past month and data surprises have become less negative, leading to an improvement in many lead indicators that we follow.
Chinese October activity data, however, was unexpectedly poor with the economy continuing to slow due to US tariffs and the absence of meaningful stimulus as policy makers continue to prioritise reducing debt as a proportion of GDP.
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