Martin Leissl/Bloomberg

Charting the Markets: Global Stocks Set for Best Month Since 2011

Japanese stocks rise, DAX surges and the Indonesian rupiah jumps 7 percent.

October has seen global stocks bounce back from their third-quarter nightmare. The MSCI All Country World Index is on track for its biggest monthly increase in four years, rising 8 percent, after sinking 10 percent the previous three months. The gains have been driven by fading expectations for a U.S. rate hike in 2015, while China announced measures to bolster its economy, including the sixth interest rate cut in a year. Asian stocks are heading for the biggest monthly jump in over six years. European stocks are on track to match the MSCI Asia Pacific Index, with the Stoxx Europe 600 Index on pace for its best month since July 2009, almost recovering its third-quarter drop.

History didn't repeat itself in Japan. Almost a year to the day from when the central bank unveiled record stimulus, it refrained from adding more even though it won't reach its 2 percent inflation target. That goal has been pushed back to the six months through March 2017, from the prior half-year period. Before today's announcement economists were evenly split on whether more stimulus would be unveiled. Japanese stocks rose after the Nikkei newspaper reported the government may consider extra fiscal stimulus if the economy needs it. The Nikkei 225 Index had its best month in over two years, jumping almost 10 percent.

Germany's DAX Index is Europe's best performing stock market in October. Worldwide it's only been bettered by primary indices in Jamaica and Argentina, which have risen 36 percent and 24 percent, respectively. It's been some turnaround for German stocks, which sank 12 percent in the third quarter, hurt by the Volkswagen emissions scandal. After plunging 53 percent July though September, the German automaker's preferred shares rebounded 11 percent in October. The DAX is still trading below its April record.

Only one currency in the world, out of the 156 tracked by Bloomberg, fared better than the Indonesian rupiah against the U.S. dollar in October: The Sierra Leone leone. The rupiah bounced back from an 8.6 percent third-quarter plunge, the biggest in two years. Behind its resurgence lay diminished prospects for higher U.S. interest rates and a stabilizing Chinese economy. With a December U.S. rate hike back on the table and a Chinese-induced currency war looming, forecasters like ABN Amro don't think the rupiah's rally will last. The world's worst performing major currency in October? The Swedish krona.

Mark Barton is a presenter on Bloomberg TV. Follow him on Twitter @markbartontv

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