A New Dawn for Global Markets?
Thomas Johannes Look
Capital Management (up 41,75%+ in H1 2024, up 23,17%+ in H2, since 1 July 2024), Corporate Advisory & Digital Publishing
Revisiting the Good, the Bad, and the Ugly: Global Stock Markets at a Crossroads
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Thank you for reading this week's edition of Closelook@Global Stock Markets, dated November 09, 2024 ??. The next edition will be published on November 16, 2024, at 2.00 p.m. ET.
The next edition of Closelook@US Stock Markets will be published on November 10, 2024, at 2.00 p.m. ET.
The next edition of Closelook@Hypergrowth will be published on November 13, 2024, at 2.00 p.m. ET.
A Closelook At This Edition
(1) This Week's Action: Global Stocks In Bifurcation Mode
The week spanning from Monday, October 28 to Friday, November 01, 2024, displayed severe cracks in the global bull market narrative. The week spanning from Monday, 04 November until Friday, 08 November, displayed stock markets in bifurcation mode and healed most of those cracks.
Three groups of markets could be identified - the good, the bad, and the ugly. Group Good stock markets are beneficiaries of the Trump victory. Group Bad stock markets identified themselves as losers. Group Ugly stock markets were in bad shape before the US election, which did not change after the election result.
The Dow Jones Global Index moved north in the past week - from the 4900 level to 5000 (see above chart, top left).
It broke the very short-term downward channel to the upside (see above chart, top right). It found resistance at the downward-sloping consolidation trendline, which formed in September 2024 and provided resistance to the rise of the index in late October (see above chart, bottom left).
I expect a break above the trendline to occur next week if the US CPI and PPI show that inflation is still moderating (see above chart, bottom left).
This may lead to the traditional year-end rally, which may last until the end of January (typical seasonal pattern).
The index looks like there will be a further extension inside an already extended wave 3 before a more significant consolidation wave 4 is shaping.
The price action since the end of September looks like a consolidation inside an ongoing bull market and not like a topping formation. The long-term bull market channel is fully intact.
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(2) Global Stock Markets: Comprehensive Overview Of 36 Global Stock Markets
Argentina, Taiwan, Hungary, Germany (DAX), Spain, and India continue to be the six best-performing global stock markets outside the US, taking a one-year perspective.
The table below displays 36 global stock markets. Laggards are France, Mexico, South Korea, and the German MDAX.
While the German DAX is among the top global performers, the MDAX is among the worst. DAX companies derive +70 percent of their revenue internationally. They are not an indication of the state of the German economy. MDAX companies do most of their business inside Germany/EU. They are an accurate indication of the state of the German economy.
The only index in the red, the worst-performing index globally, taking a 1-year perspective, continues to be the Russian RTS Index.
Taking a 5-day (Trump week) view, the picture changes considerably. Various Chinese stock markets have been the top performers. The Russian stock market also greeted the Trump victory with joy, as did Taiwan stocks.
Laggards have been European stocks as well as those in Indonesia and India. The failure of the ruling coalition distorted price action in Germany.
Inside China, stocks benefiting from more domestic stimulus have been top performers. I expect the second leg of the China bull to manifest now, led by domestically oriented stocks.
The entire article is part of the Closelooknet newsletter. You can read it on Substack at https://closelooknet.substack.com/
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1 周This is an insightful analysis of how geopolitics and financial policies shape market trends. The observation about the bifurcation in global stocks is especially striking. How do you see central bank policies playing a role in this divide moving forward?