Global Markets On A Roll
While the current rally is too fancy to last for long, cautiousness about sharp corrections may create a volatile stretch until the next earnings seasons
The global markets ended the fortnight on a positive note as bullish sentiments continued to attract buyers to invest in stocks available at attractive valuations. In the US, DJIA and S & P 500 gained by 0.59 per cent and 0.98 per cent, respectively. NASDAQ jumped by 2.76 per cent during the fortnight, recovering from the massive technology sell-off. As the three indices continue to trade near record highs, the bumpy May ride is expected to extend to June as well. While the current rally is too fancy to last for long, cautiousness about sharp corrections may create a volatile stretch until the next earnings seasons.
Inflation worries, tightening of monetary policies, resurgence in corona virus cases and decline in financial and banking stocks dragged FTSE which ended in the negative territory, down by 0.15 per cent during the fortnight. For the same period of time, DAX and CAC 40 extended gains on hopes of faster economic recovery. DAX rose by 0.16 per cent while CAC 40 was up by 1.25 per cent. The Shanghai Composite index jumped around 2.78 per cent during the fortnight. Chinese healthcare stocks gained on the announcement of the three-child policy. As China realised that its working population is decreasing with the greying population being a burden to the economy and fertility rates dropping down, a three-child policy was announced to boost birth rates.
Beijing had previously scrapped its decades-old one-child policy in 2016, replacing it with a two-child limit to try and stave off risks to its economy from a rapidly ageing population but after looking at the recent data, China announced that married Chinese couples may have up to three children. Additionally, other Chinese stocks posted their best monthly gain in six months as soft domestic factory activity in May eased worries over policy tightening while a stronger yuan boosted foreign inflows. Hang Seng rose by 3.52 per cent during the fortnight, led by strong gains in technology stocks and positive economic data from China.
China’s Caixin Manufacturing Purchasing Managers’ Index in May hit a yearly high of 52.8. South Korea’s benchmark index KOSPI jumped by 2.21 per cent during the fortnight backed by strong domestic as well as global economic data fuelling investors’ risk appetite. The won also rose against the dollar. Korea’s exports jumped around 45.6 per cent YoY in May 2021, extending their gains to a seventh consecutive month.
Amongst other Asian indices, Japan’s benchmark Nikkei index was up by 3.72 per cent while Singapore’s Straits Times index rose by 2.75 per cent during the fortnight. Other well-known indices in global markets such as S & P/TSX Composite Index, which is the benchmark Canadian index, rose by 1.32 per cent during the fortnight whereas Brazil’s BOVESPA index surged by 2.67 per cent. The S & P/ASX 200, which is considered the benchmark for Australian equity performance, ended the fortnight in the positive territory gaining by 1.96 per cent.