Thursday, 29 June 2017

US stocks rise despite elevated valuations

Markets were mixed on Wednesday.

The S&P 500 rose 0.9 percent, the STOXX Europe 600 was flat while the Nikkei 225 fell 0.5 percent.

Sam Stovall, chief investment strategist at CFRA, wrote that investors “are encouraged by the likely eventual passage of a tax cut, combined with a projected pickup in U.S. economic growth and the expected outperformance of actual earnings growth versus estimates” but “are held back by elevated valuations”.

However, Kim Forrest, senior analyst and portfolio manager at Fort Pitt Capital Group, said that stocks are “fairly valued”.

Goldman Sachs strategist Charles Himmelberg wrote in a note on Wednesday: “With interest rates near multi-century lows, the so-called 'Fed model,' which compares earnings yields to bond yields, retains a powerful grip on the 'valuation narrative' in the equity market.”

However, he also said that “yield comparisons across equities and bonds are a flawed metric” as it does not take into account future inflation and corporate earnings growth.

Wednesday, 28 June 2017

Stocks fall as central bankers turn more hawkish

Markets mostly fell on Tuesday.

The S&P 500 fell 0.8 percent and the STOXX Europe 600 fell 0.8 percent. However, the Nikkei 225 rose 0.4 percent.

Oil rose for a fourth consecutive day. West Texas Intermediate crude rose 2 percent while Brent rose 1.8 percent.

The fall in US stocks was partly attributed to a delay in a vote on health care legislation but Allianz chief economic advisor Mohamed El-Erian told CNBC that liquidity is the main driver of the stock market.

He said that corporate cash, wealthy investors willing to buy on the dip and central bank monetary policy have been the main forces driving the market but that the last component is diminishing.

“They're getting more hawkish,” El-Erian said of central bankers. “They're getting more worried about financial stability and that suggests to the market that perhaps they're not going to be as supportive as they've been in the past.”

Tuesday, 27 June 2017

Markets mixed as US durable goods orders fall

Markets were mixed on Monday.

The Nikkei 225 rose 0.1 percent and the STOXX Europe 600 rose 0.4 percent.

However, US stocks were mixed, with the S&P 500 flat and the Nasdaq Composite slipping 0.2 percent.

Sentiment in the US was hurt by a report that showed that durable goods orders fell 1.1 percent last month.

“Short-lived optimism, no doubt, from pro-growth policies ushered in by the Trump administration have been replaced by a more lackluster reality of a little improved domestic growth and consumption profile,” said Lindsey Piegza, chief economist at Stifel Fixed Income, in a note.

Monday, 26 June 2017

BIS sees brighter future for global economy but financial stress “less appreciated”

The Bank for International Settlements released its annual report on Sunday.

The BIS struck a relatively optimistic note in its report.

“The facts paint a brighter future,” the report said of the global economy. “There are clear signs that growth has gathered momentum.”

However, the report also said that “less appreciated, serious financial stress could materialise as financial cycles mature if their contraction phase were to turn into a more serious bust”.

That is a risk that you cannot criticise Marc Faber of not appreciating.

Faber, the editor of “The Gloom, Boom & Doom Report”, told CNBC last week that the bull market “will end very badly, extremely badly”.

Saturday, 24 June 2017

Stocks mixed as oil rebounds

Markets were mixed on Friday.

The S&P 500 rose 0.2 percent and the Nikkei 225 rose 0.1 percent. However, the STOXX Europe 600 fell 0.2 percent.

Oil rose on Friday with West Texas Intermediate crude rising 0.6 percent but it still ended down 4.4 percent for the week, its fifth consecutive weekly decline.

“There’s a bigger chance that stocks of most oil producers will fail to rise this year, after gaining in 2016,” said Ken Odeluga, City Index market analyst, in a research note.

The stock market as a whole, though, has not been significantly affected by the tumble in oil prices.

Bloomberg reported that the correlation between daily swings in the S&P 500 and crude has been roughly zero the past month, the lowest since January and far below the five-year highs reached in 2016 when oil last plummeted.

Friday, 23 June 2017

Markets flat amid opposing analyst views

Markets were mostly little-changed on Thursday.

In the US, the S&P 500 and Dow Jones Industrial Average both fell less than 0.1 percent but the Nasdaq Composite rose less than 0.1 percent.

Elsewhere, the STOXX Europe 600 was flat while the Nikkei 225 fell 0.1 percent.

The flattish market performances come as analysts appear divided on the direction of stocks.

Canaccord Genuity chief market strategist Tony Dwyer told CNBC on Wednesday that the stock market is a “terrific buy”.

This comes just two days after Gluskin Sheff chief economist and strategist David Rosenberg said on CNBC that the booming stock market is in “denial”.

Thursday, 22 June 2017

Stocks fall as oil tumbles again

Markets fell on Wednesday.

The S&P 500 fell 0.1 percent, the STOXX Europe 600 fell 0.2 percent and the Nikkei 225 fell 0.5 percent.

Stock markets were weighed down by another decline in oil prices on Wednesday. West Texas Intermediate fell 2.3 percent and Brent fell 2.6 percent.

Oil fell despite the US Energy Information Administration reporting on Wednesday that domestic crude supplies fell by 2.5 million barrels for the week ended 16 June, as the report also showed that weekly domestic production rose by 20,000 barrels to 9.35 million barrels a day.

Wednesday, 21 June 2017

Markets fall, oil in bear market

Markets were mostly lower on Tuesday.

The S&P 500 fell 0.7 percent and the STOXX Europe 600 fell 0.7 percent.

Earlier in Asia, the Nikkei 225 rose 0.8 percent but the Shanghai Composite fell 0.1 percent.

Oil fell on Tuesday. West Texas Intermediate crude fell 2.2 percent and is now in bear-market territory. Brent fell 1.9 percent.

“The assumption that extended OPEC supply cuts would underpin the oil price is unraveling by the day,” wrote London Capital Group senior analyst Jasper Lawler.

Also on Tuesday, MSCI announced that China’s domestic equities will join its benchmark indices.

Tuesday, 20 June 2017

S&P 500 hits record high but high tech valuations a concern

Markets rose on Monday.

In the US, the S&P 500 rose 0.8 percent to a record high as the Nasdaq Composite jumped 1.4 percent.

The STOXX Europe 600 rose 0.9 percent and the Nikkei 225 rose 0.6 percent.

Peter Lewis, a managing partner at Murphy Capital Management, said that tech valuations are probably near the high end of the band, “but if earnings and merger activity keep going, that could bode well for the sector”.

However, Phil Davis, chief executive officer at PSW Investments, said that 5,600 on the Nasdaq is a key level and warned: “If we fail to hold 5,600, then you will begin to see panic setting in as fund managers are forced to consider the reality of their overvalued holdings.”

Monday, 19 June 2017

Stocks near record highs but "not about to crash"

US stocks had a mixed performance last week. The Dow Jones Industrial Average rose 0.5 percent to finish at a record high but the S&P 500 was flat and the Nasdaq Composite fell 1 percent.

Still, all three stock indices are at or near record highs, with many investors viewing stocks as overvalued.

However, James Connington at The Telegraph wrote last week that stock markets "are not about to crash".

The reasons are as follows:
1. The global economic recovery isn't over
2. Centrals banks won't let them
3. Company profits are growing
4. Cash is already sitting on the sidelines
5. Investors aren't 'irrational' yet

In addition, JPMorgan has pointed out that the much-touted concern that the stock market's rally has been concentrated in growth stocks may be misplaced.

"While equity leadership has been narrowing into growth stocks, history suggests it is not at extreme levels and not far from historic norms," JPMorgan equity strategists wrote in a note.

Saturday, 17 June 2017

Markets mixed as BoJ leaves monetary policy unchanged

Markets were mixed on Friday.

In the US, the Dow Jones Industrial Average rose 0.1 percent but the S&P 500 was flat and the Nasdaq Composite fell 0.2 percent.

Markets elsewhere were more positive. The STOXX Europe 600 rose 0.7 percent and the Nikkei 225 rose 0.6 percent.

Early on Friday, the Bank of Japan concluded its meeting by keeping monetary policy steady and upgrading its assessment of private consumption for the first time in six months.

Kuroda told a news conference that there is “some distance to achieving 2 percent inflation” and that the BoJ will debate an exit from its ultra-loose monetary policy only after that is achieved.

Friday, 16 June 2017

Markets fall, risk of more losses for tech and energy stocks

Markets fell on Thursday.

The S&P 500 fell 0.2 percent, the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 fell 0.3 percent.

“Our view is that it’s a bit of a correction and we are certainly not surprised by the uptick in volatility,” said Eric Wiegand, senior portfolio manager at the Private Client Reserve, US Bank.

“Given how long they’ve been rising, and by how much, I think there’s still a lot of room to go on the downside,” said Aaron Clark, portfolio manager at GW&K Investment Management.

The Nasdaq Composite fell another 0.5 percent on Wednesday and Nigam Arora suggests that the smart money is not buying tech stocks at the moment.

Oil also fell on Thursday. West Texas Intermediate crude declined 0.6 percent and Brent slipped 0.2 percent.

Jeff Reeves thinks that “things don't look to be getting better soon” for oil and, with the stock market's recent troubles, traders could go risk-off, and that “spells trouble for energy stocks”.

Thursday, 15 June 2017

Markets fall as Fed raises rates

Markets mostly fell on Wednesday.

In the US, the Dow Jones Industrial Average rose 0.2 percent to close at a record high but the S&P 500 fell 0.1 percent and the Nasdaq Composite fell 0.4 percent.

Elsewhere, the STOXX Europe 600 fell 0.3 percent and the Nikkei 225 fell 0.1 percent.

Oil fell after US government data showed a smaller-than-expected weekly decline in domestic supplies and an increase in gasoline stockpiles and crude production. West Texas Intermediate crude fell 3.7 percent and Brent fell 3.5 percent.

Markets were little-moved by the Federal Reserve's decision on Wednesday to raise its benchmark rate a quarter point to a range of 1 to 1.25 percent. The Fed also announced that it will begin the process of reducing its balance sheet this year.

The Fed raised interest rates even as it acknowledged that inflation “has declined recently” and “is expected to remain somewhat below 2 percent in the near term”.

Wednesday, 14 June 2017

S&P 500 hits record high even as investors say stocks too expensive

Markets rose on Tuesday.

The S&P 500 rose 0.5 percent to close at a record high while the Nasdaq Composite rebounded 0.7 percent after a two-day decline.

Elsewhere, the STOXX Europe 600 rose 0.6 percent and the MSCI Asia Pacific Index rose 0.3 percent.

Chris Beauchamp, chief market analyst at IG, suggested that there “will be plenty of dip buyers out there who have been waiting for a pullback”.

Still, many investors think that the US stock market is overvalued. A recent survey from Bank of America Merrill Lynch showed that a record net 44 percent of fund managers polled believe stocks are too expensive, up from a net 37 percent last month.

Tuesday, 13 June 2017

Markets fall amid tech sell-off but some analysts see buying opportunity

Markets fell on Monday.

In the US, the Nasdaq Composite followed up Friday's plunge with another decline of 0.5 percent. The S&P 500 fell 0.1 percent.

Elsewhere, the STOXX Europe 600 fell 1.0 percent and the Nikkei 225 fell 0.5 percent.

Karyn Cavanaugh, senior market strategist at Voya Financial, said that the tech sell-off is “a little concerning” but still thinks that “any swoon should be a buying opportunity for investors”.

Indeed, several analysts told CNBC that they believe the weakness in tech stocks will be short-lived, and although a summer consolidation is possible, the sell-off is not necessarily an indication that the broader market is about to crack.

In contrast, Howard Gold, founder and editor of GoldenEgg Investing, wrote on MarketWatch that the big run for the tech sector's highest flyers “is coming to an end”.

Monday, 12 June 2017

US stock market about to be hit by a storm?

David Stockman, former director of the Office of Management and Budget under President Ronald Reagan, thinks that the US stock market may be about to be hit by a storm.

“This is one of the most dangerous market environments we've ever been in. It's the calm before a gigantic, horrendous storm that I don't think is too far down the road,” he told CNBC.

In contrast, PNC Asset Management's global chief investment strategist Bill Stone thinks that the market will keep rallying.

“We'll still likely see good [earnings] growth rates for the rest of the year,” he told CNBC last Thursday. He added that the US economy “is probably going to be picking up here”.

Saturday, 10 June 2017

Nasdaq plunges, tech bubble bursting?

Markets were mostly higher on Friday.

The Dow Jones Industrial Average rose 0.4 percent, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 rose 0.5 percent.

While most stock markets were able to shrug off the prospect of a hung parliament in the UK after Thursday's election, the Nasdaq Composite plunged 1.8 percent after a warning from Goldman Sachs that the big technology stocks such as Facebook, Amazon, Apple, Microsoft and Alphabet may be overextended.

“This outperformance, driven by secular growth and the death of the reflation narrative, has created positioning extremes, factor crowding and difficult-to-decipher risk narratives,” said Robert Boroujerdi, an analyst at Goldman Sachs, in a note.

Indeed, Mitch Goldberg, president of investing firm ClientFirst Strategy, wrote in a CNBC commentary that the current tech rally looks like the one in 1999.

“Could today be the day we remember as the one in which the tech bubble burst?” he asked.

Friday, 9 June 2017

Markets mixed as ECB drops reference to lower rates

Markets were mixed on Thursday.

In the US, the S&P 500 was little-changed but the Nasdaq Composite rose 0.4 percent to close at a record.

Elsewhere, the STOXX Europe 600 was also little-changed while in Asia, the Nikkei 225 fell 0.4 percent even as most other Asian stock markets rose.

The European Central Bank left interest rates unchanged at its monetary policy meeting on Thursday. In addition, it dropped any reference to a future rate cut.

Mario Draghi, president of the ECB, said in a press announcement in Tallinn, Estonia, that the bank considered the risk in the region to now be “broadly balanced”.

On the political front, former FBI Director James Comey’s appearance in front of the US Senate Intelligence Committee concluded without any significant revelations.

However, in the UK election, an exit poll suggested that Prime Minister Theresa May's Conservative Party would fail to secure a majority in parliament, triggering a fall in sterling.

Thursday, 8 June 2017

Oil plunges but stocks “able to hold off on a big selloff”

Oil prices plunged on Wednesday.

West Texas Intermediate crude fell 5.1 percent while Brent fell 4.1 percent after a report showed that US crude stockpiles unexpectedly rose for the first time in nine weeks.

Stock markets largely shrugged off the turmoil in oil.

The S&P 500 rose 0.2 percent, the STOXX Europe 600 fell 0.1 percent and the Nikkei 225 was little-changed on Wednesday.

Mark Kepner, managing director of sales and trading at Themis Trading, was impressed by the stock market's resilience, noting that it has “been able to hold off on a big selloff” despite the oil plunge and political concerns.

Still, Jack Bouroudjian, chief economist and co-founder of UCX, told CNBC that the US stock market is “one bad headline” away from a 5 percent to 7 percent drop.

In contrast, Avi Gilburt, founder of ElliottWaveTrader, thinks that there will not be any big correction “until we hit a top probably in 2018”.

Wednesday, 7 June 2017

Markets fall as investors brace for crucial events

Markets fell on Tuesday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 fell 0.7 percent and the Nikkei 225 fell 1.0 percent.

Lisa Kopp, head of Traditional Investments Group at US Bank Wealth Management, expects “sideways markets over the short-term due to seasonality”.

Meanwhile, though, “market sentiment remains very fragile”, said Masashi Murata, a senior currency strategist at Brown Brothers Harriman.

Indeed, with the UK elections, European Central Bank meeting and former Federal Bureau of Investigation Director James Comey's testimony on alleged Russian interference in US affairs on Thursday, analysts at Rabobank are braced for “a volatile session on Thursday and Friday”.

Tuesday, 6 June 2017

Markets fall amid terrorism concerns

Markets fell on Monday.

The S&P 500 and the STOXX Europe 600 fell 0.1 percent. Most Asian stock markets also fell.

Reaction to the terrorist attack in London on Saturday was relatively muted.

Adam Sarhan, chief executive of 50 Park Investments, said that “the fact that we’re not down more after an attack like this is a sign of strength”.

Oil prices fell, reversing early gains that had followed news that Saudi Arabia, Egypt, Bahrain and the United Arab Emirates had cut relations with Qatar for allegedly interfering in their internal affairs and supporting terrorism.

Monday, 5 June 2017

Record-breaking US bull market may continue but faces turbulent week

The US stock market made record highs last week and some analysts think that the bull run will continue.

Wunderlich Chief Market Strategist Art Hogan is one such analyst.

“People have said ‘we've come too far, too fast,’ and ‘we’ve got to retrace some of this move,’” he said on CNBC.

However, Hogan said: “If you look at the four longest bull markets in terms of duration and percentage moves, we’re in third place right now. So in terms of length and certainly in terms of percentage moves, I think we haven’t run out of runway.”

“The fundamental backdrop is good, both on earnings and the economic data in general. That will continue to be a driver here,” he added.

In the short term, though, the “stock market could face its most turbulent week of trading so far this year”, according to MarketWatch.

It cited “a trio of potentially destabilizing events on deck”: former FBI director James Comey’s testimony, the UK election, and the ECB monetary-policy meeting.

Saturday, 3 June 2017

Stocks rise as US employment grows less than expected

Markets rose on Friday.

The S&P 500 rose 0.4 percent to another record high, the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 jumped 1.6 percent.

A Labor Department report on Friday showed that US employment rose 138,000 in May, below economists' forecasts.

Curt Long, chief economist at the National Association of Federally-Insured Credit Unions, wrote in a note that while a quarter-point rate hike by the Federal Reserve later this month remains likely, “the slowing pace of job growth combined with still-muted wage growth may lead some officials to downgrade their expectations for further policy tightening in the second half of the year”.

The US 10-year Treasury yield fell nearly six basis points while oil fell 1.5 percent.

Friday, 2 June 2017

Markets rise amid optimism about economy

Markets rose on Thursday.

The S&P 500 rose 0.8 percent to close at a record high, the STOXX Europe 600 rose 0.4 percent and the MSCI Asia Pacific Index rose 0.3 percent.

Stocks rose amid optimism about the economy.

With US private-sector employment jumping 253,000 in May, exceeding expectations, John Manley, chief equity strategist at Wells Fargo Funds, thinks “this is not a bad environment we are in”.

Meanwhile Chris Williamson, chief business economist at IHS Markit, wrote in a note that the “eurozone upturn is developing deeper roots as factories enjoy a spring growth spurt” as the eurozone manufacturing PMI was confirmed at 57.0, the highest level since April 2011.

Thursday, 1 June 2017

Stocks slip as market leaders look "extended"

Markets mostly closed lower on Wednesday.

The S&P 500 fell less than 0.1 percent while the STOXX Europe 600 and the Nikkei 225 both fell by 0.1 percent.

Financial stocks were among the biggest losers as JP Morgan Chase and Bank of America both said at an industry conference on Wednesday that trading is weakening in the second quarter.

Ian Winer, head of the equities division at Wedbush Securities, said he was “concerned that there are quantitative models out there that are ‘buy high, buy higher’”.

In contrast, Colin Cieszynski, chief market strategist at CMC Markets, said he thinks “some traders are starting to throw in the towel”.

Kevin Marder at MarketWatch noted that the rally has been narrow, involving mainly the largest growth stocks.

While Marder acknowledged that a rally led by quality growth stocks tends to be healthy, the current leaders are nearly all “technically extended above their most recent support areas”, and this “should signal caution as to fresh-money buys”.

Wednesday, 31 May 2017

Markets fall but remains “fairly resilient”

Markets mostly fell on Tuesday.

The S&P 500 fell 0.1 percent and the STOXX Europe 600 fell 0.2 percent. Asian markets were mixed.

Mark Kepner, managing director of sales and trading at Themis Trading, said that the market is “fairly resilient” but that stocks were due for a “little pullback”.

BlackRock chief equity strategist Kate Moore said that it is “very possible this market is range bound for the summer” but “I have a hard time, from valuation or sentiment perspectives, seeing reasons for a big swoon”.

Tuesday, 30 May 2017

Stocks slip, eurozone still needs monetary stimulus

Markets were quiet on Monday with the US, UK and China markets closed.

Both the STOXX Europe 600 and the Nikkei 225 saw small losses.

Italy's FTSE MIB though plunged 2.0 percent after weekend reports that an election could take place as early as September.

European markets are likely to continue to be supported by European Central Bank monetary policy though.

Speaking at the European Parliament on Monday, ECB President Mario Draghi said the eurozone economy still needs a “fairly substantial amount” of monetary stimulus from the ECB to help boost inflation in a sustainable way.

Monday, 29 May 2017

US tech sector getting pricey but stocks expected to continue rising

The Nasdaq Composite rose 2.1 percent last week to close at a record high.

However, some analysts are becoming concerned that the US tech sector has advanced too far.

Chad Morganlander, a portfolio manager at Washington Crossing Advisors, told CNBC on Friday that some of the tech stocks are “starting to get into nosebleed territory”.

Kate Mitchell, co-founder and partner at Scale Venture Partners, said some of the tech companies “are getting pricey”.

However, other analysts remain sanguine.

Ned Riley, the CEO of Riley Asset Management, who is known for warning investors during the dot-com boom, told CNBC that despite the latest tech rally, valuation “isn't so ridiculous”.

With little to fear from the tech sector, other analysts expect the stock market to continue rising.

Kourtney Gibson, president and head of global equity and fixed income at Loop Capital, said: “We will continue to see a slow melt-up.”

Meg Green, CEO of Meg Green & Associates, said now is the time to be “all in, with a little cash on the side”.

Louis Navellier, founder and chairman of Navellier & Associates, said: “There's still a lot of very good buying pressure.”

Saturday, 27 May 2017

US stocks at record high as markets turn deaf ear to bad news

Markets were mixed on Friday.

US stocks were marginally higher, with the S&P 500 closing at a record high after a gain of just 0.75 point. The Nasdaq rose 0.1 percent to also close at a record high.

However, the STOXX Europe 600 declined 0.2 percent and most Asian markets fell.

Oil prices rose after Thursday's plunge. West Texas Intermediate crude rose 1.8 percent while Brent rose 1.3 percent.

The S&P 500's gain on Friday was its seventh consecutive advance and enabled it to end the week up 1.4 percent, continuing a turnaround from the middle of last week, when the S&P 500 had plunged 1.8 percent.

The rapid rebound had Bob Pisani at CNBC writing that markets are turning a deaf ear to any bad news.

Meanwhile, Victor Reklaitis at MarketWatch noted that the index's year-to-date rally has been built on five big tech stocks, but also cited Mark Arbeter, president of Arbeter Investments, in saying that breadth is still better than at the end of 2015.

Indeed, Wharton School finance professor Jeremy Siegel told CNBC on Friday that the valuations for the tech sector remains well below the levels seen in the late 1990s and that stocks “are still the place to be for investors”.

Doug Kass, president of Seabreeze Partners, disagrees. “I don't like stocks or bonds,” he was quoted by MarketWatch as saying.

MarketWatch also said that total margin debt in the US stock market hit a record high in April and hedge fund leverage reached its highest level since the financial crisis, possible signs of complacency among investors.

Friday, 26 May 2017

Stocks rise but oil plunges despite OPEC output cut extension

Markets were mostly higher on Thursday.

The S&P 500 rose 0.4 percent, the Nikkei 225 rose 0.4 percent and the Shanghai Composite jumped 1.4 percent.

However, the STOXX Europe 600 fell 0.1 percent.

Oil fell amid disappointment that the Organization of the Petroleum Exporting Countries’ decided to extend production cuts by just nine months. West Texas Intermediate crude plunged 4.8 percent while Brent fell 4.6 percent.

However, some analysts see hope that a big drop in US oil stocks is finally on the way.

US crude stocks peaked at 533 million barrels in March and were at 516 million as of last week. Andrew Lebow, senior partner at Commodity Research Group in Darien, Connecticut, said that “we'll easily get below 500 million barrels over the next six to eight weeks”.

“At the pace sustained since the start of March, the crude surplus would be totally gone by end-December,” Standard Chartered analysts said in a note this week.

Thursday, 25 May 2017

Markets higher as China credit rating cut, US stocks getting overbought

Markets were mostly higher on Wednesday.

The S&P 500 rose 0.3 percent, the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 rose 0.7 percent.

China's Shanghai Composite Index tumbled early in the day after Moody’s Investors Service cut its rating on the country’s debt but recovered to end the day 0.1 percent higher.

In the US, stocks rose despite the release by the Federal Reserve of the minutes of its monetary policy meeting in May showing broad agreement among officials to shrink its balance sheet.

Indeed, Thomas Kee Jr noted that volatility in the US stock market has been low even as it is coming close to being overbought.

“One of our key indicators, what we call the Sentiment Table, is on the verge of saying the U.S. stock market will likely stall and then fall,” he wrote.

Wednesday, 24 May 2017

Markets shrug off Manchester blast amid positive eurozone data

Markets were mostly higher on Tuesday.

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

However, the FTSE 100 fell 0.2 percent after a bomb explosion in Manchester left more than 20 people dead.

A report on Tuesday showed that the IHS Markit eurozone PMI held a six-year high in May at 56.8 while Germany's flash manufacturing PMI hit a 73-month high of 59.4. Also, Germany's Ifo business climate index rose to 114.6, an all-time high.

Carsten Brzeski, chief economist at ING, wrote that “the entire eurozone economy could become the positive growth surprise of 2017”.

While US flash PMI readings were mixed, Karyn Cavanaugh, senior market strategist at Voya Financial, said that the eurozone data “bodes well for global equities”.

In addition, Raymond James chief investment strategist Jeffrey Saut said that US corporate earnings “are going to continue to surprise on the upside”.

Tuesday, 23 May 2017

Markets mixed as tech sector raises concerns

Markets were mixed on Monday.

The S&P 500 rose 0.5 percent, the Nikkei 225 rose 0.4 percent but the STOXX Europe 600 fell 0.1 percent.

Despite the rebound in the US, some analysts remain concerned about further weakness.

Michael Stanes, investment director at Heartwood Investment Management, wrote in a note on Monday that “we are in the latter part of the market cycle and sentiment is likely to remain vulnerable to pressure points as we move through the year”.

Matt Maley, equity strategist at Miller Tabak, thinks that tech stocks will be key.

Maley wrote that “if they do not play catch-up as we move through the week, it will raise the odds that we'll see more weakness in the stock market before long”.

On the other hand, others think that investors may be putting too much faith in the tech sector.

The Nasdaq Internet index, with a P/E of 61, “is approaching P/E levels that are as spicy as they were in prior ‘big tops’ in stock markets, and at a time where policy is turning less favorable”, BofA wrote in a note to clients.

Morgan Stanley wrote of “concerns that index-level moves have been driven by tech to a large and perhaps unsustainable degree”.

Monday, 22 May 2017

Keep buying the dips

Stock markets experienced a turbulent period last week. The S&P 500 plunged 1.8 percent on Wednesday, and despite recovering on the following two days, ended the week down 0.4 percent.

Some analysts remain sanguine though.

Immediately after the tumble on Wednesday, Terry Simpson, multi-asset investment strategist at the BlackRock Investment Institute, told CNBC: “If we have mini-corrections like today, it could actually be a nice opportunity to put some capital to work.”

Similarly, Nick Colas, chief market strategist at Convergex, thinks that investors should continue to buy the dips in the stock market.

Saturday, 20 May 2017

Stocks continue rebound, tech sector sees big inflows

Markets rose on Friday.

The S&P 500 rose 0.7 percent, the STOXX Europe 600 rose 0.6 percent and the Nikkei 225 rose 0.2 percent.

The S&P 500 ended the week down 0.4 percent but analysts remain hopeful that the downside is limited.

“This week political risk has caught up on the market but it’s still unclear whether it has any legs,” wrote Deutsche Bank strategist Jim Reid and research analyst Craig Nicol in a note on Friday.

“U.S. policy uncertainty is arguably greater than at any time since last November’s elections, but that should not entirely cloud what remains a generally supportive growth backdrop for equity markets, especially in the eurozone,” said Ian Williams, an economist and strategist at Peel Hunt.

The Nasdaq Composite rose 0.5 percent on Friday but fell 0.6 percent for the week.

This week's setback for technology stocks comes after a record-breaking run for the sector that has, according to Bank of America Merrill Lynch, seen money moved into the sector at a rate that, if it keeps up, would mark the biggest inflows to the space in 15 years.

Friday, 19 May 2017

US stocks rebound but analysts see rotation to Europe

Markets were mixed on Thursday.

After the US market plunge on Wednesday, the Nikkei 225 fell 1.3 percent and the STOXX Europe 600 fell 0.5 percent.

However, later on Thursday, the S&P 500 rose 0.4 percent.

JP Morgan said in a note that “equities could see further weakness in the short-term” but “fundamentals remain supportive”.

Meanwhile, a CNBC report suggests that a rotation to European stocks makes sense.

“With the U.S. and Brazil beset by political turmoil and Chinese stocks on the downswing, the big trade of 2017 increasingly looks like a rotation to Europe,” the report said.

“The fundamental backdrop continues to support a positive stance on the European market,” said Ronan Carr, European equity strategist at Bank of America Merrill Lynch.

Thursday, 18 May 2017

Markets fall on Trump turmoil

Markets fell sharply on Wednesday.

The MSCI All-Country World Index fell 1.2 percent as the S&P 500 tumbled 1.8 percent, the Nasdaq Composite plunged 2.6 percent and the STOXX Europe 600 fell 1.2 percent.

The US 10-year Treasury yield fell 11 basis points to 2.22 percent. Benchmark yields in France and Germany fell six basis points to 0.83 percent and 0.378 percent respectively.

Analysts attributed the declines to political turmoil in the US centred on President Donald Trump.

“If he’s preoccupied defending himself and if it goes a lot further, then any hope of his legislative agenda coming to the fore is going to be reduced,” John Stopford, head of fixed-income at Investec Asset Management Ltd in London, said.

“What has been setting in over the course of the day is that political uncertainty is something that’s likely going to be with us for a significant amount of time,” said Dennis Debusschere, Evercore ISI’s head of portfolio strategy and quant.

However, some technical analysts think that further declines will be limited.

Katie Stockton, chief technical strategist at BTIG, said that the S&P 500 has an initial support level of 2,340 but thinks that “a decline of that magnitude will be avoided”.

“For the most part we really do see this contained,” said Sameer Samana, global quantitative strategist at Wells Fargo Investment Institute.

On the other hand, Ilya Feygin, managing director and senior strategist at WallachBeth Capital, thinks that if Trump's proposed tax reforms, deregulation and infrastructure spending are cancelled, “this market is going to go down so hard that we haven't seen anything like it in the last few years”.

Wednesday, 17 May 2017

Markets mixed, investors see higher stock prices despite high valuations

Markets were mixed on Tuesday.

In the US, the S&P 500 fell less than 0.1 percent but the Nasdaq Composite rose 0.3 percent to close at a record for the second consecutive day.

Elsewhere, the STOXX Europe 600 was flat while the Nikkei 225 rose 0.3 percent.

Some investors are concerned about high stock prices.

“Prices aren’t at all justified by valuations or economic data,” said Adam Strauss, portfolio manager at Appleseed Fund. He warned that investors are “taking a lot of risk by staying in the S&P 500”.

Investors, though, appear to be ignoring valuations.

MarketWatch reported that according to investor surveys conducted by Robert Shiller, although 40 percent of both institutional and retail investors view current stock prices as cheap, the lowest since 1999, more than 90 percent of investors expect prices to continue to rise for another year.

And it could get worse. Goldman Sachs wrote on Monday that the earnings momentum that started the year has already shown signs of stalling.

Wouter Sturkenboom, senior investment strategist at Russell Investments, thinks “that profit margins will contract and revenue growth will disappoint”, and that stocks at current levels are “not worth the risk”.

Monday, 15 May 2017

China loans grows but some analysts see no crisis ahead

Data from the People's Bank of China on Friday showed that China's banks extended 1.1 trillion yuan in net new local currency loans in April, rising from 1.02 trillion yuan in March, though household loans fell to 571 billion yuan from 797.7 billion yuan.

Analysts were not alarmed by the data.

“April's credit expansion could have been due to front-load funding demand ahead of regulatory tightening, and the risk tilts to the downside in the coming months,” said ANZ's China economists David Qu and Betty Wang in client note.

Julian Evans-Pritchard, China economist at Capital Economics concluded that “the deceleration in credit growth which began last summer continued uninterrupted last month with a pick-up in loan growth more than offset by a decline in bond issuance”.

Indeed, an article by Bernstein’s Michael Parker and Kelman Li concluded that while China had “lots of debt”, they see “no crisis”.

“So, yes, tightening – in the form of a slowdown in credit formation growth - is likely in the second half,” they wrote. “But that tightening is, in our view, the next step in the rehabilitation of Chinese policy making… and equity markets.”

Saturday, 13 May 2017

Markets mixed, VIX and recession risk falls

Markets were mixed on Friday.

The S&P 500 fell 0.1 percent but the Nasdaq Composite rose 0.1 percent.

Elsewhere, the STOXX Europe 600 rose 0.3 percent but the Nikkei 225 fell 0.4 percent.

The CBOE Volatility index fell 1.7 percent to 10.42.

“No one really knows what it means to have such a low VIX at a time of such high uncertainty, rising rates, high valuations, and corporate profits that aren’t particularly strong,” said Jonathan Angrist, chief investment officer of Cognios Capital. “It is very unusual.”

Meanwhile, recession risk is also falling, according to Morgan Stanley, which places the probability of a US recession over the next 12 months at 25 percent.

“A stronger global backdrop and the delayed promise of tax reform have lowered this assessment from 30% previously,” wrote Ellen Zentner, a Morgan Stanley economist.

Friday, 12 May 2017

Markets fall as investors wait for Fed rate hike

Markets were mostly lower on Thursday.

The S&P 500 fell 0.2 percent and the STOXX Europe 600 fell 0.6 percent.

However, the Nikkei 225 rose 0.3 percent to close at a 17-month high.

Mark Kepner, managing director of sales and trading at Themis Trading, said that “with earnings season almost over, we might see some sideways moves until June when the Fed is likely to raise rates”.

Thursday, 11 May 2017

Stocks rise, oil jumps

Markets mostly rose on Wednesday.

The S&P 500 rose 0.1 percent, the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 rose 0.3 percent.

Markets largely shrugged off President Donald Trump's firing of the FBI director.

Michael Hewson, chief market analyst at CMC Markets, said that “investors don’t appear to be too concerned about the risks of sharp selloffs”.

Stocks were supported by a rally in oil. West Texas Intermediate crude rose 3.2 percent on Wednesday after US government data revealed the biggest weekly decline in domestic crude supplies so far this year. Brent rose 3.1 percent.

However, Tyler Richey, co-editor of the Sevens Report, said that “fundamentals are not yet pointing to a decided break higher in oil prices any time soon”.

Wednesday, 10 May 2017

Markets mixed but bull market "still intact"

Markets were mixed on Tuesday.

In the US, the S&P 500 slipped 0.1 percent but the Nasdaq Composite rose 0.3 percent to close at another record high.

European stocks rose, with the STOXX Europe 600 rising 0.5 percent to end at its highest level since August 2015.

Asian stocks were mixed. The Nikkei 225 fell 0.3 percent but the Hang Seng Index jumped 1.3 percent.

Some analysts remain optimistic.

“The bull market is still intact and in the absence of negative news we may see prices drift higher,” said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.

“The risk-on trade is in full swing and traders are considering the recent pullback in the European market as an opportunity,” said Naeem Aslam, chief market analyst at Think Markets.

Other analysts are more cautious.

“This is a market that needs an unequivocal solid package of economic data to move higher,” said Quincy Krosby, chief market strategist at Prudential Financial in the US.

There are also doubts on European stocks.

“Market-wise, this is the end of the European rally,” said Steen Jakobsen, chief economist at Saxo Bank, in a note on Monday. “We came into this election convinced that Macron would win and believing euro assets were undervalued; this has now run its course.”

Tuesday, 9 May 2017

US stock market ekes out record, tech seen outperforming

Markets were mixed on Monday.

The S&P 500 rose less than a point but still ended at a record high.

However, the STOXX Europe 600 fell 0.1 percent despite the pro-EU centrist Emmanuel Macron's victory in France's presidential election.

In Asia, the MSCI Asia Pacific ex Japan Index rose 0.8 percent while the Nikkei 225 surged 2.3 percent after returning from a three-day market holiday.

In currency markets, the euro fell against the US dollar after touching a six-month high earlier.

"A Macron win is largely priced into the euro," said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.

Investor sentiment remained positive though. The CBOE Volatility Index closed at 9.77, its lowest since December 1993.

"We remain largely constructive of the equity market and view that the path of least resistance is higher," said Bill Northey, chief investment officer at Private Client Group of US Bank.

Among stocks, Goldman Sachs sees the tech sector outperforming the broader market.

Monday, 8 May 2017

Macron wins French election

Pro-European centrist Emmanuel Macron won France's presidential election on Sunday.

"I will fight with all my strength against the divisions that are undermining us," Macron said at his campaign headquarters.

Markets reacted positively to the news. S&P 500 futures rose, as did Asian markets in early trading, and the euro rallied to a six-month high.

Saturday, 6 May 2017

US stocks hit records amid good jobs report

US stocks hit record highs on Friday.

The S&P 500 and the Nasdaq Composite rose rose 0.4 percent to close at new all-time highs.

Elsewhere, the STOXX Europe 600 rose 0.7 percent to end at a 21-month high but the Shanghai Composite Index fell 0.9 percent.

US stocks were supported by a good jobs report. The Labor Department reported on Friday that the US economy created 211,000 jobs in April while the unemployment rate fell to 4.4 percent from 4.5 percent.

“April employment data should put to rest concerns that somehow the economy was slowing to a complete stall,” said Stephen Blitz, chief US economist at TS Lombard.

In Europe, investors were focused on the French presidential election on Sunday, where centrist Emmanuel Macron is expected to beat far-right Marine Le Pen.

Peter Donisanu, analyst at Wells Fargo, said that while “the most immediate effect of a Macron win on Sunday would be to ameliorate concerns about the rise of populism in Europe for at least the next few months”, there could be “a short-term ‘buy the rumor, sell the news’ pullback in European risk assets”.

Friday, 5 May 2017

Stocks mostly rise but oil plunges

Markets were mostly higher on Thursday.

The S&P 500 rose just under 0.1 percent and the STOXX Europe 600 rose 0.7 percent.

However, earlier on Wednesday, Asian stocks mostly fell. The Shanghai Composite fell 0.3 percent.

Oil plunged, weighing down energy stocks, especially in the US. West Texas Intermediate crude and Brent fell 4.8 percent.

In Europe, investor sentiment improved after a televised debate between French presidential candidates Emmanuel Macron and Marine Le Pen suggested that the market-friendly centrist Macron remains favoured to win the election.

Thursday, 4 May 2017

Markets slip as Fed holds but summer rate hikes could trigger correction

Markets were mostly lower on Wednesday.

The S&P 500 slipped 0.1 percent, the STOXX Europe 600 fell less than 0.1 percent and the Shanghai Composite fell 0.3 percent.

After a monetary policy meeting, the Federal Reserve released a statement on Wednesday saying that the slowing in growth during the first quarter is “likely to be transitory” and that job gains were “solid”.

“That officially puts two more interest-rate increases on the table,” said Matthew Peterson, chief wealth strategist at LPL Financial.

The yield on the US 10-year Treasury note rose four basis points to 2.32 percent on Wednesday.

On Tuesday, Jeffrey Gundlach, chief executive officer of DoubleLine, had said he expects the 10-year Treasury yield to move higher, and a summer interest rate rise should “go along with a correction in the stock market”.

Wednesday, 3 May 2017

Markets rise amid robust US earnings and strong eurozone manufacturing

Markets rose on Tuesday.

The S&P 500 rose 0.1 percent, the STOXX Europe 600 rose 0.8 percent and the MSCI Asia Pacific Index rose 0.4 percent.

Robust corporate earnings helped US stocks maintain their upward momentum, with Phil Orlando, chief equity market strategist at Federated investors, declaring that the “earnings recession is over”.

However, Mislav Matejka, an equity strategist at JP Morgan Cazenove, wrote in a note that “the near-term risk-reward might be getting less exciting” as “[s]ome of the positive catalysts we have been looking for, such as a robust earnings season and the easing in political tail risks, have delivered and are now behind us”.

European stocks rose after coming back from holidays after Greece reached an agreement with its creditors on austerity measures to be taken for the next tranche of bailout money.

Markets were also boosted by strong manufacturing data. A report from Markit on Tuesday showed that its eurozone manufacturng PMI rose to 56.7 in April, the highest since 2011.

Tuesday, 2 May 2017

US stocks rise as Nasdaq hits record but Europe looks cheaper

Markets rose on Monday.

The S&P 500 rose 0.2 percent while the Nasdaq Composite rose 0.7 percent to another record high.

Earlier on Monday, the Nikkei 225 rose 0.6 percent while most markets in Europe were closed for holidays.

US stocks were boosted by an agreement reached over the weekend to keep the US government funded.

Meanwhile, even as US tech stocks continued its record-breaking run, many analysts think that there's probably more to come.

“If you look across the board, tech fundamentals have been very good in internet, software, and semiconductors, so there's been a good backdrop,” Joshua Spencer, portfolio manager at T. Rowe Price, told CNBC last week.

European stocks could also be set to outperform.

Michael Batnick wrote that European stocks have underperformed US stocks over the past few years. “That underperformance combined with investors’ attitudes toward European stocks — which are apathetic at best — has caused the valuation gap between US and European equities to widen into a gulf,” he wrote.

Batnick concluded that “with the difference in valuations, the recent performance, and investor flows, it might be time to consider investing at least a portion of your portfolio outside the United States”.

Monday, 1 May 2017

How overvalued are stocks?

CNBC's Alex Rosenberg asked: Just how overvalued are stocks? He looked to Jeremy Siegel and Robert Shiller for answers.

... In a Wednesday interview on CNBC's "Trading Nation," Shiller, a Yale University professor of economics, said that the market "hasn't been this overvalued except for a couple times in history—around 1929, around 2000."

Shiller is referring to the cyclically adjusted price-earning (or CAPE) ratio...

... Jeremy Siegel, a professor of finance at the University of Pennsylvania's Wharton School ... says the CAPE ratio is now giving off a false signal.

... "We are in a low interest rate world. We shouldn't use a 10-year lagging average now, especially with the growth that we're seeing."

There is a problem in comparing Shiller with Siegel.

Robert Shiller is probably most famous for writing the book Irrational Exuberate in 2000 that suggested that the stock market was overvalued just as it hit a peak.

Jeremy Siegel is probably most famous for writing the book Stocks for the Long Run that showed that stocks have returned an average of 6.5 percent to 7 percent per year after inflation over the last 200 years.

In other words, while Shiller has shown some prescience in forecasting for the short to medium term, Siegel is only known for his forecast for the very long term.

John Hussman did a thorough analysis of market valuation in his article last week "Valuation Breakevens" and concluded that "current valuation extremes present a hostile combination of weak prospective return and steep risk".

Saturday, 29 April 2017

Markets fall but buying opportunity could be coming soon

Markets fell on Friday.

The S&P 500 fell 0.2 percent, the STOXX Europe 600 fell 0.2 percent and the Nikkei 225 fell 0.3 percent.

Ian Winer, head of equities at Wedbush Securities, said that this “feels like a breather after a hell of a rally this week”.

However, the rally may be set to resume soon, according to Simon Maierhofer.

Writing in MarketWatch, Maierhofer said that a “number of longer-term indicators suggest higher prices” and that the best buying opportunity of the year in stocks could be coming up soon.

Friday, 28 April 2017

Nasdaq hits record high, S&P 500 could follow even as it “looks dangerous”

Markets mostly slipped on Thursday.

In the US, the S&P 500 fell less than 0.1 percent but the Nasdaq Composite rose 0.4 percent to a record high.

The STOXX Europe 600 fell 0.2 percent despite European Central Bank President Mario Draghi telling a news conference that “the euro area economy is becoming increasingly solid”.

Similarly, the Nikkei 225 fell 0.1 percent as the Bank of Japan raised it economic forecasts.

In the US, Patti Domm at CNBC wrote that “strong earnings momentum could drive the S&P 500 back to its all-time high in the very near future”.

Indeed, Nobel laureate Robert Shiller told CNBC that the stock market “could keep going up” even as he warned that it is overvalued and that it “looks dangerous”.

Thursday, 27 April 2017

Markets mixed as Trump tax plan released amid high stock valuations

Markets were mixed on Wednesday.

The S&P 500 fell less than 0.1 percent but the STOXX Europe 600 rose 0.5 percent and the Nikkei 225 jumped 1.1 percent.

Stocks fell in the US despite Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn releasing a one-page outline of President Donald Trump’s tax-reform plan in a press conference on Wednesday.

“The market was looking for more specific color on rates and the reduction of exemptions, but color on the repatriation tax, which is the single most important issue, was left unaddressed by that press conference,” said Nicholas Colas, chief market strategist at Convergex.

Investors may also be getting more nervous as the US stock market becomes increasingly expensive. Ben Carlson noted on Wednesday that the S&P 500’s cyclically-adjusted price-to-earnings ratio reached 30 this week.

However, that has not stopped Morgan Stanley from raising its allocation to US equities this week.

“Tactically, the outcome of the first round of the French elections has been market-friendly and investor sentiment does not look extended. We add to U.S. equities. We fund this by taking cash to neutral,” wrote Andrew Sheets, a strategist at Morgan Stanley, in a report.

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.

Wednesday, 19 April 2017

Markets fall, UK stocks plunge on election announcement

Markets fell on Tuesday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 fell 1.1 percent and the MSCI Asia Pacific Index fell 0.5 percent.

Tepid corporate earnings weighed on stocks in the US while a surprise announcement of an early UK general election pulled the FTSE 100 down 2.5 percent.

“The market is very fragile,” said Nicholas Teo, a trading strategist at KGI Securities in Singapore. “The strategy seems to be that investors are selling when the market is up.”

Tuesday, 18 April 2017

Markets mixed but stocks “only game in town”

Markets were mixed on Monday.

The S&P 500 rose 0.9 percent, the Nikkei 225 rose 0.1 percent but the Shanghai Composite Index fell 0.7 percent. European markets were closed.

Paul Nolte, portfolio manager at Kingsview Asset Management, said that “while valuations are still way too high, stocks remain the only game in town if you’re looking at them versus bonds”.

However, in China, stocks fell over an escalating regulatory crackdown on stock manipulation, and despite a report on Monday showing that the economy grew 6.9 percent in the first quarter from a year earlier, accelerating for the second consecutive quarter.

Monday, 17 April 2017

US stocks expensive but Japan “too cheap to ignore”

With US stocks expensive, John Hussman thinks that investors should keep their powder dry.

“Based on current valuation extremes, the outlook for prospective 12-year S&P 500 total returns remains dismal, likely averaging less than 1% annually by our estimates,” he wrote in his latest article. “Dry powder has considerable value here, not because of the return it currently generates, but because of the opportunity it may afford to establish constructive and even aggressive market exposure over the completion of this cycle, at higher prospective returns than are currently available.”

Alternatively, investors may want to consider the Japanese stock market. According to a Bloomberg report, Japanese stocks have become “too cheap to ignore”.

“It’s a buying opportunity,” Hiroshi Matsumoto, head of Japan investment at Pictet Asset Management, was quoted as saying.

Braver investors could consider emerging stock markets. A New York Times article noted that emerging market stocks have risen almost 17 percent in the 12 months through March.

“What has been driving emerging market returns in the last year was the recovery in commodity prices, which led to a number of commodity producers’ doing well,” said Arjun Divecha, head of the emerging markets equity team at GMO.

Saturday, 15 April 2017

Geopolitical tensions rattle markets but it is China's debt that may explode

Markets have been rattled in recent days by geopolitical tensions in Syria and North Korea.

Then on Thursday, the US used its largest non-nuclear bomb to attack the Islamic State's holdings in Afghanistan.

And on Friday, as the aircraft carrier USS Carl Vinson sailed towards the Korean Peninsula, China's Foreign Minister Wang Yi urged all parties “to stop provoking and threatening each other and not to make the situation irretrievable”.

However, ZeroHedge reminds us that it is China's huge debt that could really threaten global financial markets.

ZeroHedge asserts that “just one number truly matters: that of the global credit impulse, which as we cautioned for the first time two months ago, had recently turned negative, mostly as a result of the recent deceleration in China's credit creation”.

ZeroHedge added that “the reflation trade of the past year was entirely the function of Chinese credit dynamics”, so this deceleration could adversely impact the global credit impulse.

On Friday, Reuters reported that China's banks made 1.02 trillion yuan in new loans in March, down from 1.17 trillion yuan in February.

However, China's total social financing, a broad measure of credit and liquidity in the economy, surged to 2.12 trillion yuan in March from 1.15 trillion yuan in February, reflecting probably a surge in off-balance sheet lending.

Wendy Chen, an economist at Nomura, said: “We don't think the strength in shadow banking activity will continue.”

Indeed, the concern is that bad loans may already be at destabilising levels, with Reuters noting that “some China watchers warn a debt crisis may be inevitable if loan and money supply growth continues to sharply outpace the rate of economic expansion”.

Friday, 14 April 2017

Stock markets fall but gold rises

Markets fell on Thursday.

The S&P 500 fell 0.7 percent, the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 fell 0.7 percent.

Stock markets fell as fear appears to be creeping back into markets, with the Credit Suisse Fear Barometer, which measures the cost of buying protection against declines in the S&P 500 Index, nearing an all-time high this week.

However, gold rose 0.8 percent on Thursday and the US dollar fell after US President Donald Trump said the currency “is getting too strong”.

Brien Lundin, editor of Gold Newsletter, said that gold “seems likely to build upon its gains in the weeks ahead”.

Thursday, 13 April 2017

Markets mixed, volatility rises

Markets were mixed on Wednesday.

The S&P 500 fell 0.4 percent and the Nikkei 225 fell 1.0 percent but the STOXX Europe 600 rose 0.2 percent.

“We think the rally driven by hope of faster growth was overdone and there is a potential for disappointment,” said Wouter Sturkenboom, senior investment strategist at Russell Investments.

Indeed, the US 10-year Treasury yield fell three basis points to 2.27 percent while the CBOE Volatility Index rose to a five-month high.

Bloomberg reports that investors such as Rick Rieder at BlackRock Inc. and Bob Michele at J.P. Morgan Asset Management say they have been betting that price swings will grow more dramatic in the days and months ahead.

Wednesday, 12 April 2017

Markets fall amid geopolitical concerns

Markets were mostly lower on Tuesday.

The S&P 500 fell 0.1 percent, the Nikkei 225 fell 0.3 percent, the DAX 30 fell 0.5 percent but the FTSE 100 rose 0.2 percent.

Ongoing geopolitical concerns over Syria and North Korea kept safe haven assets supported. The US 10-year Treasury yield fell six basis points to 2.30 percent while gold rose 1.6 percent.

Richard Perry, market analyst with Hantec Markets, wrote in a note that “there has been a negative shift in risk sentiment as safe haven assets outperform” and as a result, “equities will tend to suffer”.

Oil rose though amid talk of a possible extension to the OPEC-led production cut agreement. West Texas Intermediate crude rose 0.6 percent and Brent rose 0.5 percent.

Tuesday, 11 April 2017

Markets mixed as investors look to earnings for further gains

Markets were mixed on Monday.

The S&P 500 edged up 0.1 percent, the STOXX Europe 600 was flat and the Nikkei 225 rose 0.7 percent.

“Stocks are not cheap, and it’s tough to find something that looks inexpensive, but we’ve seen them much more expensive and we should continue to grind higher as we get into earnings,” said John Brady, managing director at RJ O’Brien & Associates.

Phil Orlando, chief equity market strategist at Federated Investors, agrees. “We’re expecting good numbers and I think we’ll break to the upside if the numbers come in positive, but markets are always vulnerable to any kind of disappointment,” he said.

However, Avi Gilburt wrote that while he is “still looking for a much higher U.S. stock market in 2017”, he expects further weakness until May.

This decline represents a buying opportunity, he wrote, as he expects the S&P 500 to “rally to the 2,500 region into the summer”.

Monday, 10 April 2017

Markets likely to shrug off Syria strike

US stocks fell last week, with the S&P 500 declining 0.3 percent.

The S&P 500 ended the week with a slight 0.1 percent dip on Friday. A US military strike on a Syrian airbase initially provoked selling but the market recovered later in the day.

Reactions among analysts to the attack on Syria were mixed.

Sean Callow, senior strategist at Westpac Banking Corp, said that “there is likely to be a lingering sense of unease”.

However, Shane Oliver, head of investment strategy at AMP Capital Investors, said that the strike is “unlikely to have a lasting impact in markets”, an opinion shared by Jim McCaughan, CEO of Principal Global Investors.

Indeed, Kevin Marder said that “the market has bullishly become more of an earnings-driven affair”, while geopolitical incidents may “provide a buying opportunity”.

Saturday, 8 April 2017

Markets mixed after weak US jobs report and military strike on Syria

Markets were mixed on Friday.

The S&P 500 dipped less than 0.1 percent but the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 rose 0.4 percent.

US stocks were held back by a weak employment report. A Labor Department report showed that the US economy created just 98,000 new jobs in March, the smallest gain in almost a year.

Some analysts see a silver lining though.

“It wasn’t exactly a disaster, maybe it backs off some of the ultrahawks [on the Fed] and we only get two rate hikes this year,” said Bill Stone, chief investment strategist at PNC Asset Management Group.

A US military strike against a Syrian airbase on Friday helped boost stocks of defence contractors but Nigam Arora thinks that apart from very mild boosts to gold and oil, markets will not be significantly affected in the long term.

Friday, 7 April 2017

US and European stocks rebound as Trump-Xi meeting begins

Markets were mixed on Thursday.

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

However, the MSCI Asia Pacific Index fell 0.8 percent as the Nikkei 225 plunged 1.4 percent.

“We are seeing a short-term snap back from yesterday’s sharp selloff with the hardest-hit sectors recovering,” said Frank Cappelleri, chartered market technician at Instinet.

“Every time the market dips, investors come back,” said Paul Nolte, portfolio manager at Kingsview Asset Management.

Investors will be keeping an eye on the two-day meeting between US President Donald and Chinese President Xi Jinping that began on Thursday.

Connor Campbell, financial analyst at Spreadex, wrote in a note that “there is the chance for fireworks in the next 24 hours”.

However, Julian Evans-Pritchard, China economist at Capital Economics, said “we don’t expect any major policy announcements to come out of the meeting”.

Thursday, 6 April 2017

US stocks reverse sharply after Fed releases minutes

Markets were mixed on Wednesday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 was flat and the Nikkei 225 rose 0.3 percent.

The US 10-year Treasury yield fell after the minutes of the last Federal Reserve monetary policy meeting showed that it would not substantially shrink its bond holdings.

The Fed minutes also showed that some officials thought that stock prices were “quite high relative to standard valuation measures”.

Perhaps investors think so too.

Mark DeCambre at MarketWatch noted: “After staging what was shaping up to be a healthy stock-market surge, equity-index benchmarks buckled Wednesday, ending squarely in the red and registering their worst reversal since February 2016.”