Is global optimism on stocks underpinned by fundamentals?
India, of course, did badly, thanks to demonetization, but for the global economy, the outlook is positive
Could the return of optimism in the equity markets be more than mere faith in US president-elect Donald Trump’s tax cuts and infrastructure spending plans and in European Central Bank (ECB) boss Mario Draghi’s extension of quantitative easing?
Could the rise in markets be supported by economic fundamentals?
If the Purchasing Managers’ indices (PMIs) are any guide, the global economy may be looking up.
The JP Morgan Composite PMI, a gauge of economic activity in both the manufacturing and services sectors in the world, was at a high 53.3 in November, the same as in October.
The press release on the global PMI said, “Solid rates of expansion were registered for both manufacturing production and service sector business activity. The latter saw growth improve to the fastest in a year, while the pace of increase in manufacturing output was close to October’s 27-month record." Growth was solid in the US, the Euro area and in the UK. Developed economies did better than emerging markets. India, of course, did badly, thanks to demonetisation, but for the global economy, the outlook is positive.
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