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October is traditionally an awful month for stock market investors.
And yet, for the first time since the summer of 2021, global equities look set to complete back to back monthly gains for October and November.
The STOXX 600, the most widely-followed pan-European stock index, is up some 13% since the beginning of October while the S&P 500, the broadest US stock index, is up by just over 10% in the same period.
This optimism largely reflects hopes that central banks around the world, led by the US Federal Reserve, will “pivot” and slow the pace at which they have been raising interest rates.
That thesis, of course, relies on an easing in inflation.
There was good news on that front earlier this month, when the headline rate of inflation for October came in at a lower than expected annual rate of 7.7%, making it the first month since February that the figure had come in below 8%.
And on Wednesday morning, encouragingly, the eurozone got in on the act.
The headline rate of inflation in the 19 countries using the euro fell for the first time in 17 months in November, falling from the record 10.6% seen in October to 10%, way below the 10.4% that had been expected by economists
The key factor was an easing in the pace at which energy costs are increasing. These rose, on a year-on-year basis, by 34.9% – down from the astonishing 41.5% seen in October.
That was the good news.
The bad news was that food, tobacco and drink prices in the eurozone are still rising on a year-on-year basis – up from 13.1% in October to 13.6% in November. And “core” inflation – the measure that strips out volatile elements such as food, drink and energy – was unchanged at 5% from the October number.
Accordingly, reaction to the figures was muted. Inflation remains at five times the…
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