Thursday, 5 May 2016

Stocks fall, China faces rising defaults

Stocks fell on Wednesday.

The S&P 500 fell 0.6 percent, the STOXX Europe 600 tumbled 1.1 percent and the Shanghai Composite Index slipped 0.1 percent.

The yield on the US 10-year Treasury note fell to 1.786 percent from 1.800 percent on Tuesday.

"The continued narrative is that the global economy is not very strong, even if the US is the best of the bunch," said Joe Bell, a senior equity analyst at Schaeffer's Investment Research.

While Chinese stocks held up relatively well on Wednesday, China is at risk of seeing a rise in defaults as corporate borrowers face a record 3.7 trillion yuan of local bond maturities through year-end.

Wednesday, 4 May 2016

Markets fall except in China

Markets fell on Tuesday.

The S&P 500 fell 0.9 percent as US crude oil plunged 2.5 percent.

Elsewhere, the STOXX Europe 600 fell 1.7 percent and the Hang Seng Index plunged 1.9 percent.

“Our clients are very edgy, they’re nervous,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute.

“There’s no real reason at the moment for the market to be making new highs,” said Kenny Polcari, director at brokerage O’Neil Securities.

“What we need is earnings growth and earnings surprises,” said John Bailer, portfolio manager at the Boston Company Asset Management.

Among the few gainers on Tuesday was the Shanghai Composite Index, which jumped 1.8 percent even as the China manufacturing PMI by Caixin fell 0.3 in April to 49.4, the 14th consecutive month of decline.

Tuesday, 3 May 2016

Stocks mixed, oil falls as rally seen capped

Markets were mixed on Monday.

The S&P 500 rose 0.8 percent but the STOXX Europe 600 slipped 0.1 percent and the Nikkei 225 plunged 3.1 percent.

US crude oil fell 2.5 percent as a Bloomberg report suggested that the oil price rally is not as deep-rooted as it looks at first glance.

The report noted that while front-month futures for US crude have risen 21 percent this year, the five-year-forward contract fell 2.6 percent over the same period. It suggested that this reflects the view that shale oil production could rebound as prices recover, capping any rally.

This in turn means that oil stocks may have rebounded too far, with some analysts saying that energy stocks are already pricing in significantly higher long-term oil prices.

Monday, 2 May 2016

Sell in May or hold?

Stocks in the United States fell last week, but there are reasons to think that further falls could be limited in May despite the month's negative reputation.

The Standard & Poor's 500 Index fell 1.3 percent last week, its biggest loss since the week ended 5 February.

Despite that loss, the S&P 500 still finished April up nearly 0.3 percent for its first two-month win streak this year.

However, with the month of May up next, is it time to follow the adage "sell in May and go away"?

Analysts cited by CNBC mostly think not.

Paul Hickey, co-founder of Bespoke, said: "We're seeing strong breadth in the market," he pointed out. "As long as that holds in there, it's a reason to hold in May, not sell in May."

Daniel Suzuki, Bank of America/Merrill Lynch equity strategist, said underweight positions and a lack of positive sentiment "are reasons to believe the market can grind a little bit higher from here". However, he also sees stocks ending the year at lower levels and that "we would be fading the rally."

"Historically this is the kind of year" for sell in May, said Sam Stovall, chief US equity strategist at S&P Global Market Intelligence. "We are in the fourth year of a president's term in office, in which two unknowns are running for president."

Still, Stovall did not recommend selling the market but rotating stocks instead, pointing out that consumer staples and health-care stocks historically show strong outperformance in the May to October period.

Saturday, 30 April 2016

Stocks fall, gold gains

Stocks fell on Friday.

The S&P 500 fell 0.5 percent but still finished the month up 0.3 percent.

The Stoxx Europe 600 fell 2.1 percent but was up 1.2 percent for the month.

Safe havens did better on Friday. Gold rose 1.9 percent while the yield on the US 10-year Treasury note fell to 1.821 percent from 1.838 percent on Thursday.

Friday, 29 April 2016

Stocks fall as US growth slows, BoJ holds monetary policy

Stocks slumped on Thursday.

The S&P 500 fell 0.9 percent after the US Commerce Department reported that the economy grew at an annualised 0.5 percent rate in the first quarter, the slowest rate in two years, while the Nikkei 225 plunged 3.6 percent after the Bank of Japan unexpectedly left monetary policy unchanged.

However, US crude oil rose 1.5 percent, its third consecutive day of gains.

Kate Warne, investment strategist at brokerage Edward Jones, said that the decline in stocks was “a reminder to investors that not everything’s going to go right”.