Optimism drives markets to historic month

U.S.

Stocks rose last week on new round of vaccine optimism and diminishing political uncertainty. Most of the major benchmarks hit record highs, the Dow Jones Industrial Average crossed the 30,000 threshold for the first time.Reopening hopes boosted cyclical shares, particularly energy stocks, while health care, utilities, consumer staples, and real estate shares lagged. The market was closed Thursday for the Thanksgiving holiday, but weekly trading volumes remained unusually elevated.

The third announcement of positive preliminary vaccine results helped markets get off to a strong start to the week. AstraZeneca announced on Monday before the start of trading that the vaccine it was developing in partnership with Oxford University was up to 90% effective for one of two dosing regimens used in the study.

SP500 30.11.

EU

European shares rose for a fourth consecutive week, fueled by positive vaccine developments and fading U.S. election uncertainties. However, the advance lost steam after the UK and Germany extended coronavirus restrictions and vaccine euphoria waned. The pan-European STOXX Europe 600 Index ended the week 0.93% higher, while Germany’s DAX Index advanced 1.51%, France’s CAC 40 rose 1.86%, and Italy’s FTSE MIB added 2.92%. The UK’s FTSE 100 Index was little changed.

Germany’s 10-year bund yield initially rose on more positive vaccine news. However, dovish messaging from the European Central Bank reaffirmed market expectations for more stimulus, dragging yields back down to Monday’s levels. UK gilt yields also fell. Lingering Brexit worries and renewed concerns over economic growth prospects drove the decline, outweighing earlier increases in sentiment supported by vaccination progress.

Japan

Japanese stocks surged in the holiday-shortened trading week.

Japan’s stock markets were closed on Monday, November 23, for Labor Thanksgiving Day. For the week,

the Nikkei 225 Stock Average advanced 4.4% (

1,117 points) and closed at 26,644.71, capping a 16% advance thus far this month and marking its highest level since April 1991. For the year to date, the benchmark is ahead 12.6%. The large-cap TOPIX Index and the TOPIX Small Index, broader measures of Japanese stock market performance, also recorded strong weekly gains. The yen strengthened versus the U.S. dollar and traded near JPY 104 on Friday.

China

Chinese stocks rose for the week on solid economic data. The Shanghai Composite Index gained 0.9% for the week, according to Reuters. In fixed income markets, the yield on the sovereign 10-year bond ended the week roughly unchanged. In currency trading, the yuan ended broadly flat against the U.S. dollar. A recent uptick in defaults in China’s high yield bond market has raised expectations that Beijing will focus on corporate sector deleveraging in the near term, as opposed to further stimulating the economy.