Saturday, 16 December 2017

Markets mixed amid uncertainty on US tax reform

Markets were mixed on Friday.

The S&P 500 rose 0.9 percent to close at another record high but the STOXX Europe 600 fell 0.2 percent and the Nikkei 225 fell 0.6 percent.

Jasper Lawler, head of research at London Capital Group, wrote in a note that dip-buyers “failed to materialize, fearing the ticking clock on U.S. tax reform”.

Other analysts are optimistic.

“There is definitely a momentum in the market thanks to the prospect of tax cuts, but let’s not forget that the economic growth is also pretty good and has been supporting the market all year,” said Kim Caughey Forrest, senior analyst and portfolio manager at Fort Pitt Capital Group.

Friday, 15 December 2017

Markets fall, China raises rates

Markets fell on Thursday.

The S&P 500 fell 0.4 percent, the STOXX Europe 600 fell 0.5 percent and the Nikkei 225 fell 0.3 percent.

A day after the Federal Reserve raised interest rates, the People's Bank of China also raised rates, albeit slightly. The PBC increased rates on reverse repurchase agreements by 5 basis points for the 7 and 28-day tenors.

However, the European Central Bank and the Bank of England left their interest rates unchanged.

Thursday, 14 December 2017

Markets mixed as Fed raises rates

Markets were mixed on Wednesday.

In the US, the Dow Jones Industrial Average rose 0.3 percent and the Nasdaq Composite rose 0.2 percent but the S&P 500 was flat.

Elsewhere, the STOXX Europe 600 fell 0.2 percent and the Nikkei 225 fell 0.5 percent.

The Federal Reserve raised its federal funds rate by 25 basis points to between 1.25 and 1.5 percent on Wednesday.

“It was pretty much a certainty that the Fed was going to do what it did,” said Eric Green, senior portfolio manager and director of research at Penn Capital Management. “It was a nonevent that had been fully priced into markets.”

Wednesday, 13 December 2017

S&P 500 hits record as Fed meets

Markets were mostly higher on Tuesday.

The S&P 500 rose 0.2 percent to close at another record high while the STOXX Europe 600 rose 0.7 percent. However, the Nikkei 225 fell 0.3 percent.

The Federal Reserve began its monetary policy meeting on Tuesday, with a rate hike “highly priced in”, according to Kjersti Haugland, chief economist at DNB.

“Market participants are more concerned about a looming recession or low inflation,” Haugland said. “The risk here is that the Fed is correct and wage inflation and consumer inflation will come back with vengeance, in which case they will have to be more aggressive.”

Tuesday, 12 December 2017

Markets rise but “danger of a bubble” in some large stocks

Markets were mostly higher on Monday.

The S&P 500 rose 0.3 percent to a record high and the MSCI Asia Pacific Index rose 0.7 percent. However the STOXX Europe 600 fell less than 0.1 percent.

Oil rose, with West Texas Intermediate crude rising 1.1 percent.

As stocks continued to rise ever higher, at least one fund manager thinks that some of the world’s biggest companies have become overvalued and could be hiding big risks.

Robert Naess, who manages stock investments at Nordea Bank AB, told Bloomberg that companies such as Amazon.com Inc and Alibaba Group Holding Ltd are overvalued and there is “danger of a bubble in them”.

Monday, 11 December 2017

US stocks could crash 25-50 percent

The S&P 500 hit a record high on Friday but some see rising risks of a US stock market crash.

Saxo Bank’s head of FX strategy John Hardy said that there is a risk that a number of asset bubbles built up during 2017 could burst in the year ahead.

“In 2018 we see the pendulum swinging back in favor of pronounced volatility risks as the irony of long periods of quiet and complacency in asset markets is that they sow the seeds for future volatility as investors underestimate tail risks and overleverage their bets on a continuation of the cycle,” he said.

Among the risks he sees are a spike in US Treasury yields and a 25 percent plunge in the S&P 500.

Meanwhile, David Tice, who runs the Prudent Bear Fund, told CNBC that there is “potentially a 50 percent chance there will be a 25 percent rally” in 2018.

However, he also said that there is a 25 percent chance of a 50 percent decline.

“Longer-term, the market is going to suck,” he said.