For the second time this year, stocks, bonds, commodities and the dollar posted monthly gains amid optimism central bank stimulus programs are bolstering growth in the world’s biggest economies.
Raw materials led, with the Standard & Poor’s GSCI Total Return Index rising 1.5 percent. The MSCI All-Country World Index of equities added 1.3 percent, including dividends. Bonds of all types returned 0.53 percent on average for a fifth monthly advance, the longest run of gains since 2010, according to Bank of America Merrill Lynch’s Global Broad Market Index. Intercontinental Exchange Inc.’s Dollar Index, which tracks the currency against those of six major U.S. trading partners, advanced 0.29 percent, its first increase since July.
The world economy has recovered to its strongest level in 18 months as China’s stimulus measures bolster growth and the U.S. seeks to avoid the so-called fiscal cliff, a Bloomberg Global Poll of investors showed Nov. 29. The Federal Reserve has pumped more than $2.3 trillion into the financial system, while the Bank of Japan is providing more than $800 billion. The European Central Bank has made about $1 trillion available in three-year loans to banks.
“With so much monetary stimulus around the world, we’ve taken the brakes off the global economy,” Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a Nov. 27 phone interview. His firm oversees $20 billion. “It should mean improved growth into next year. Officials in Europe and in the U.S. seem to realize that we’re on the precipice of some pretty negative outcomes if they don’t do something to find better solutions.”
The last time all four market measures rose in tandem was in July, when drought sent U.S. corn prices to a record and European Central Bank President Mario Draghi’s pledge to protect the euro buoyed stocks. Before that, prices hadn’t risen together since April 2010, when concerns about Greece’s ability to pay debt were heating up and economic reports were showing signs of improvement in the U.S.
While asset prices rose in November, stocks and commodities tumbled earlier in the month after U.S. President Barack Obama won re-election, continuing a conflict in Congress over the fiscal cliff of $600 billion of mandatory spending cuts and tax increases due to begin Jan. 1. The MSCI All-Country World Index slid 1.5 percent Nov. 7 and the S&P GSCI index declined 2.5 percent, the biggest drop since July 23.