Friday 27 November 2015

Global stocks rise, flattish US market unlikely to remain calm next year

Global stocks mostly rose on Thursday.

The STOXX Europe 600 rose 0.9 percent. It had risen 1.4 percent on Wednesday and is now at a three-month high.

In Asia, the Nikkei 225 rose 0.5 percent but the Shanghai Composite Index fell 0.3 percent.

US stock markets were closed on Thursday.

US stocks have been flattish in 2015 but are unlikely to repeat such a performance next year. Barron's cites Sam Stovall, US stock strategist at S&P Capital IQ, as saying that two consecutively calm years for the US stock market are rare.

Indeed, some analysts are comparing this year's market with 2011 and 1937, comparisons that suggest that next year is unlikely to be calm. From the WSJ's MoneyBeat blog:

Market watchers have been noting similarities between this year and 2011 for several months now. But another year might be a better comparison: 1937.

The distinction is an important one. If you buy the 2011 comparison, you may conclude that stocks are going to rocket higher from here. If you’re inclined to favor the 1937 analogy, you may want to prepare for a downturn.

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