Wednesday, 26 April 2017

Markets rise, Nasdaq breaks 6,000

Markets rose on Tuesday.

In the US, the S&P 500 rose 0.6 percent while the Nasdaq Composite rose 0.7 percent to close at a record 6,025.49.

The STOXX Europe 600 rose 0.2 percent, with the DAX 30 closing at a record high and the CAC 40 finishing at a nine-year high.

The MSCI Asia Pacific Index rose 0.7 percent.

Michael Antonelli, equity sales trader at Robert W. Baird & Co, noted that US corporate earnings “have been strong” and “so far it looks like the market is very optimistic on tax cuts”.

Meanwhile, Barclays on Tuesday reiterated its overweight rating on European equities. “A reduction in political risk, coupled with an end to the seven-year stagnation in earnings, should lead to an acceleration in foreign investor buying of European equities,” Barclays strategist Dennis Jose wrote in a note.

In contrast, some analysts think that investors' enthusiasm for Asian stocks is waning on concerns that economic and business cycles may have peaked.

Tuesday, 25 April 2017

Markets surge on French election result

Markets surged on Monday following the strong showing by centrist Emmanuel Macron in the French presidential election.

The S&P 500 rose 1.1 percent and the STOXX Europe 600 jumped 2.1 percent, with the CAC 40 surging 4.1 percent.

Asian markets were mixed though. While the Nikkei jumped 1.4 percent, the Shanghai Composite Index tumbled 1.4 percent on worries over potential government action to reduce market risk.

Safe-haven assets like gold, the Japanese yen, and US Treasuries all fell. The CBOE Volatility Index dropped more than 25 percent to below 11, its largest one-day percentage drop since August 9, 2011.

“With Macron heavily favored in head-to-head polling against Le Pen, it seems most likely that the negative market scenarios—priced in over recent weeks—will recede between now and the runoff,” said Timothy Graf, head of macro strategy for Europe, the Middle East and Africa at State Street Global Markets.

Monday, 24 April 2017

Markets relieved as Macron wins first round in France

Investors heaved a sigh of relief at the end of the weekend as centrist Emmanuel Macron won the first round of voting in the French presidential election on Sunday.

Macron will face far-right leader Marine Le Pen in the final voting on 7 May.

Following the Sunday vote, the euro jumped the most in a month and the yen retreated. US stock-index futures and Japanese shares also rose.

Jordan Rochester, a foreign exchange strategist at Nomura Holdings Inc, said that the market “will likely fully price in the outcome of the second round today in favor of Mr Macron”, adding that Macron as the next president of France “should be positive for the French economy and for broader European economic stability”.

Chris Weston, chief market strategist at IG Ltd, said he expects the CAC 40 Index to open about 140 points higher when trading begins in Paris, signaling gains of almost 3 percent. “There’s going to be some relief coming through.”

Saturday, 22 April 2017

Markets mixed after Paris attack

Markets were mixed on Friday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 was flat and the MSCI Asia Pacific Index rose 0.7 percent.

Oil fell. West Texas Intermediate crude fell 2.2 percent while Brent fell 1.9 percent.

Markets generally held up well on Friday after an attack in Paris on Thursday night that left a police officer as well as the assailant dead.

Nevertheless, Michael Hewson, chief market analyst at CMC Markets, noted that the attack could influence France's presidential election, increasing the likelihood “of a face-off between Marine Le Pen on the right and Melenchon on the left”, which “is unlikely to be well received by the markets”.

Markets were also possibly supported by an announcement by US President Donald Trump that he would be releasing a “massive tax cut” package next week.

Friday, 21 April 2017

Markets rise as politics dominate trading

Markets mostly rose on Thursday.

The S&P 500 rose 0.8 percent and the STOXX Europe 600 rose 0.2 percent. Asian stocks were little-changed though.

US stocks were boosted by some better-than-expected corporate earnings reports as well as comments by Treasury Secretary Steven Mnuchin that a tax bill is likely to be unveiled very soon.

European stocks were boosted by a 1.5 percent jump in the CAC 40 after a poll showed centrist candidate Emmanuel Macron coming out ahead of far-right candidate Marine Le Pen in France's presidential election.

With markets becoming increasingly focused on political developments, Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, said on CNBC on Wednesday that “all trades are purely political” and “all economic data is irrelevant”.

Schlossberg added that if the Trump administration fails to get tax reform and infrastructure spending done in the summertime, then “a huge part of the 'Trump rally' just simply dies on the vine”.

Schlossberg also said that the progress of far-right and far-left candidates to the next round in the French presidential election would be the “absolute worst-case scenario for the market”.

Thursday, 20 April 2017

Markets mixed as investors move out of expensive US stocks

Markets were mixed on Wednesday.

The S&P 500 fell 0.2 percent but the STOXX Europe 600 rose 0.2 percent.

Earlier in Asia, the Shanghai Composite Index fell 0.9 percent but the Nikkei 225 rose 0.1 percent.

US stocks were dragged down by oil. West Texas Intermediate crude fell 3.8 percent on Wednesday while Brent fell 3.6 percent.

US stocks also fell amid the reallocation of funds away from them towards other markets, according to Bank of America Merrill Lynch's latest global fund manager survey.

“A net 83% of investors think [the] U.S. is the most overvalued region, the highest response on record,” said BAML strategists Michael Hartnett and Jared Woodard in a note.