Saturday, 17 February 2018

Markets rise as fundamentals seen strong but further turbulence possible

Markets rose on Friday.

The S&P 500 finished barely higher but the STOXX Europe 600 jumped 1.1 percent and the Nikkei 225 surged 1.2 percent.

Fiona Cincotta, market analyst at City Index, said in a note that the rebound in stocks shows that “the market has quickly adjusted to the prospect of higher future inflation and a more hawkish Fed”.

Wayne Kaufman, chief market analyst at Phoenix Financial Services, said that the “fundamentals remain strong and people are responding to that.”

Mark Martiak, senior wealth strategist at Premier Wealth/First Allied, said that “fundamentals will rule the day and that the recovery is sustainable”.

However, Jim Paulsen, chief investment strategist at The Leuthold Group, is more cautious.

“I think there's going to be more turbulence at some point this year,” Paulsen told CNBC on Friday. “I think we could have a 15 percent correction.”

Friday, 16 February 2018

Markets rise, getting “comfortable” with inflation

Markets rose on Thursday.

The S&P 500 rose 1.2 percent, the STOXX Europe 600 rose 0.5 percent and the Nikkei 225 jumped 1.5 percent.

Leo Grohowski, chief investment officer of BNY Mellon Wealth Management, said that “the market is becoming more comfortable with the idea that a little bit of inflation will be OK”.

Joe Quinlan, head of thematic strategy at Bank of America Global Wealth and Investment Management, said “there is no need to panic” as non-recessionary market pullbacks “tend to be relatively short-lived”.

Thursday, 15 February 2018

Stocks jump despite higher US inflation, “worst is over”

Markets mostly rose on Wednesday.

The S&P 500 rose 1.3 percent while the STOXX Europe 600 rose 1.1 percent.

Earlier in Asia, the Nikkei 225 fell 0.4 percent but the Hang Seng surged 2.3 percent.

Markets were able to shake off a report on Wednesday that showed that US consumer prices rose 0.5 percent in January, the biggest increase in five months.

“Anything with inflation seems like a hot button nowadays, but it is a bit of a red herring here: Higher inflation and higher rates are symptoms of economic health,” said Karyn Cavanaugh, senior market strategist at Voya Financial.

“Clearly with this kind of a movement for the fourth day in a row, it does appear that it’s reasonable to assume that the worst is over at this point,” said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.

Tuesday, 13 February 2018

Markets continue rebound as some see pullback as overdone

Markets rose on Monday.

The S&P 500 surged 1.4 percent, the STOXX Europe 600 jumped 1.2 percent and the Shanghai Composite rose 0.8 percent.

Despite the rebound in the last two trading sessions, Kent Engelke, chief economic strategist at Capitol Securities Management Inc, said he found the recent volatility “paralyzing”.

“Over the short term, the selloff is likely to persist for the next few weeks because we are still in an adjustment period with people focusing on inflation data,” said Lisa Erickson, head of traditional investments for U.S. Bank Wealth Management.

Still, some strategists are optimistic.

“We may have moved from being ‘overdue’ for a pullback to approaching ‘overdone,’” Mark Haefele, the Zurich-based global chief investment officer for UBS Wealth Management, said in a note to clients.

Steven Andrew, a London-based multi-asset fund manager at M&G Investments, said: “Our predisposition would be to add equity exposure.”

Monday, 12 February 2018

Tighter monetary policy could lead to “big bear market”

The S&P 500 fell 5.2 percent last week.

While some investors are looking for a bottom to the sell-off, others are warning of a possible bear market.

“Our ongoing concerns about the recovery's tenure have been thrown into sharper focus by the steepest market sell-off since the credit crunch,” Eoin Murray, head of investment at Hermes Investment Management, said in a research note last week.

“Central bank tightening, or at least the end of post-crisis monetary accommodation, will undoubtedly prove challenging,” added Murray.

“The real issue is that we are at an inflection point in capital markets,” said Michele Gesualdi, chief investment officer at Kairos Investment Management, told CNBC last week.

Gesualdi said that an expected move to quantitative tightening in the summer would likely trigger increased market volatility and that a “big bear market” was on the horizon.

Saturday, 10 February 2018

US stocks rebound as investors look for a bottom

Markets were mixed on Friday.

The S&P 500 recovered from an early slide to finish up 1.5 percent. Earlier in the day, the STOXX Europe 600 fell 0.7 percent and the Nikkei 225 plunged 2.3 percent.

Despite the rebound on Friday, the S&P 500 still ended the week down 5.2 percent.

Bruce McCain, chief investment strategist at Key Private Bank, said that “we need to form a pretty stable base before investors can feel reassured the bottom won’t fall out from under them, and it will take some more price action before that occurs”.

Stephen Gandel at Bloomberg suggested that “a reasonable floor for stocks isn't much lower, about 2 percent, which could be why they were rallying on Friday”.

However, David Rosenberg, chief economist and strategist at Gluskin Sheff, noted that the recent correction occurred even as the US 10-year Treasury yield rose 16 basis points.

“This rare occurrence of bond yields rising even as stock markets decline was a feature in 1987 and 1994,” he said. “One of these years had a huge correction and one had massive volatility and rolling corrections. Pick your poison.”