Image: Unsplash
Image: Unsplash

Stocks climb to historic levels in best month on record

Global stocks have risen to all-time highs in a record-breaking November, with the three major US stock indexes, the Stoxx Europe 600, and the MSCI All-Country World Index all surging. On Friday 27 November, the Dow Jones jumped up 0.1% to 29910.37, its third-highest close ever. The Nasdaq rose 0.9% to 12205.85, its highest close in history. The S&P 500 gained 0.2% to close at 3638.35, its 26th record close of the year. The Dow Jones and S&P 500 rose 2.2% and 2.3%, respectively, for the week. The Nasdaq gained nearly 3%. The Stoxx 600 rose 0.4% on Friday, while the MSCI index was up by 0.1% for a record close following a month of gains.

November 2020 has been a big month for stocks, with the Dow Jones adding almost 13%, racing towards its biggest monthly advance since 1987. The S&P 500 and Nasdaq have risen 11% and 12%, respectively, their biggest monthly gains since April. The index is up 62% from its March low, when the coronavirus pandemic started worsening globally. The MSCI rose by 12.78% this month, while the Stoxx 600 is set for a gain of over 14%, a monthly record.

Rising tech and healthcare stocks helped the S&P 500 and the Nasdaq achieve their closing records. The Dow Jones also crossed the 30000 mark for the first time ever on Tuesday 24 November, rising by 1.5% to 30046.24, its ninth record close of 2020. This surge came after President Donald Trump said his administration would cooperate with President-elect Joe Biden for his transition to the White House, giving markets assurance of a smooth transition of power and an end to political uncertainties following the election.

Mr Biden’s decision to pick former Federal Reserve Chairwoman Janet Yellen as Treasury Secretary added to the market’s enthusiasm this week

“It’s a done deal for markets,” said Samy Chaar, chief economist at Lombard Odier. “Everyone is working under the assumption that it will be a Biden administration.” Mr Biden’s decision to pick former Federal Reserve Chairwoman Janet Yellen as Treasury Secretary added to the market’s enthusiasm this week, Citigroup analysts said. Gary Cohn, a former Goldman Sachs executive and Mr Trump’s chief economic adviser from 2017-2018, said that: “Janet Yellen is an excellent choice for Treasury secretary.”

President Trump’s announcement furthered a surging market which had been on the rise after the announcements of several vaccines developed to fight Covid-19, with Pfizer/BioNTech, Moderna, and Oxford/AstraZeneca publicising the 90%+ effectiveness of their vaccines this month, although the latter has since stated an error in trials may have misrepresented the data. President Trump’s statements and the vaccine news gave markets a sign of some form of stability and relief following this month’s narrow and drawn out presidential election, and its bitter aftermath, and a virus that has ravaged the world for months now. Investors look forward to a return to normal from next year, with optimism high in markets.

“The US election coupled with the vaccine [news] has removed two quite significant tail risks from the market,” said Maya Bhandari, fund manager at Columbia Threadneedle Investments. “There does still appear to be room to add further [to the gains].”

Investors look forward to a return to normal from next year, with optimism high in markets

Shawn Snyder, head of investment strategy at Citi Personal Wealth Management, said: “Investors are showing faith in the idea of a recovery by mid 2021.”

Oil is higher this month too, with Brent crude rising 0.7% to a little over $48 a barrel. Hopes of a resurgence in fuel demand and international travel after a vaccine is available have kept the market positive.

In Asia, China’s CSI 300 index rose 1.2%, Hong Kong’s Hang Seng added 0.3%, and Japan’s Topix gained 0.5%.

The UK’s FTSE 100 was one of the few downturns in Europe in a day of gains, falling 0.7%, possibly due to news of the Oxford/AstraZeneca vaccine’s report errors. Germany’s DAX rose 0.2%, while France’s CAC 40 was up 0.4%.

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