Thursday, 24 August 2017

Markets fall as traders await Jackson Hole symposium

Markets were mostly lower on Wednesday.

The S&P 500 fell 0.4 percent while the STOXX Europe 600 fell 0.5 percent but the Nikkei 225 rose 0.3 percent.

“Traders are in wait and see mode ahead of the Jackson Hole symposium that starts tomorrow,” said David Madden, market analyst at CMC Markets.

“We’re about to enter uncharted water: Unwinding QE has never been done before, but it’s about to be tried on markets that have this year exhibited a degree of calm that is worrisome when you consider what may be coming,” said Neil Wilson, senior market analyst at ETX Capital.

Wednesday, 23 August 2017

Markets rise as traders buy the dips

Markets mostly rose on Tuesday.

The S&P 500 rose 1.0 percent and the STOXX Europe 600 rose 0.8 percent.

Early on Tuesday, the Nikkei 225 dipped 0.1 percent but most other Asian markets rose.

David Morrison, market strategist at Spread Co, suggested that “traders are taking advantage of the recent selloff to buy the dips”.

Indeed, Morgan Stanley chief US equity strategist Michael Wilson wrote that its bull market check list remains intact and recommended that investors “buy the dip”.

Corporate insiders are apparently already doing that.

“The recent dip in major averages has brought insiders off the sidelines,” CNBC reported.

Tuesday, 22 August 2017

US stock market rises but “looks wobbly”

Markets were mixed on Monday.

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

While the US stock market was positive on Monday, analysts were not particularly upbeat about its prospects.

“With earnings season coming to an end, there is not much to be bullish about right now,” said Richard Perry, a Hantec Markets analyst. He added that geopolitical risk is “still elevated on the Korean Peninsula” while “the political risk of Trump’s presidency remains a driving factor”.

Sam Stovall, chief investment strategist at CFRA, said in a note that “the market’s current technical action points to the possibility of a decline of deeper proportions”.

JPMorgan's Jason Hunter said the S&P 500 could see a sell-off of as much as 8 percent as soon as next month while Paul LaRosa, Maxim Group chief market technician, said that the market “looks pretty wobbly”.

Monday, 21 August 2017

US market seeing cracks ahead of worst month for stocks

The S&P 500 fell 0.7 percent last week, its second consecutive weekly decline.

A Reuters report last week suggested that things are not likely to get better soon.

“September ranks as the worst month for stocks, according to the Stock Trader's Almanac, producing an average price return for the S&P 500 of negative 0.5 percent,” the report noted.

The report also said that more stocks have been making new 52-week lows than highs.

“There are some cracks in market breadth,” said Peter Cecchini, chief market strategist at Cantor Fitzgerald.

Also, with the S&P 500 trading at 17.7 times expected earnings, many investors consider it expensive and at risk of a selloff.

“When you're at these valuation levels in a lot of these names, it doesn't take much,” said Stephen Massocca, senior vice president, Wedbush Securities.

However, CNBC reported that stocks still look cheap relative to bonds.

“Now, the triple-B bond yield is trading about 1.5 to 2 percent below that of the earnings yield,” said Jack Ablin, chief investment officer at BMO. “Now I would argue for at least more attractive capital going into equity over bonds.”

Saturday, 19 August 2017

Markets fall, US stocks most expensive since 2003

Markets fell on Friday.

The S&P 500 fell 0.2 percent, the STOXX Europe 600 fell 0.7 percent and the Nikkei 225 plunged 1.2 percent.

While US stocks were lower for the week for the second consecutive week, the S&P 500's earnings per share increased 10.8 percent in the second quarter, the first time the index has posted two quarters of double-digit gains since 2011.

However, the US stock market remains expensive. According to Bank of America Merrill Lynch, the S&P 500's forward P/E ratio rose to 17.7 in July, its highest level in 13½ years.

Bill Baruch, senior market strategist at iiTrader, said that the market has gotten “a little ahead of itself” while Samuel Rines, chief economist and global macro portfolio manager at Avalon Advisors, said that a rise in interest rates “should lead to multiple contraction”.

Other analysts are unperturbed.

Erin Gibbs, portfolio manager at S&P Global, said that the S&P 500's forward P/E ratio would have to touch about 19 times to appear “peakish”.

In the meantime, BMO's Brian Belski said that “we are now closely monitoring our target models to determine if an upward revision is needed”.

Friday, 18 August 2017

Markets fall amid concerns over terrorism and US presidency

Markets fell on Thursday.

The S&P 500 plunged 1.5 percent, the STOXX Europe 600 fell 0.6 percent and the Nikkei 225 fell 0.1 percent.

US stocks were particularly hit by news of a suspected terrorism attack in Barcelona, Spain and concerns that Gary Cohn was resigning as economic adviser to President Donald Trump.

“With the light volume, Barcelona is not something that the market is going to handle well,” said Mark Kepner, managing director of sales and trading at Themis Trading.

“There’s no direct market impact in what Trump has done recently, but if things continue to be so polarized that his agenda is completely dead on arrival, that would have a negative impact,” said Mark Spellman, portfolio manager at Alpine Funds.

Indeed, Brett Arends at MarketWatch noted that over the past 100 years, when the US president has become too politically weakened to lead effectively, the Dow Jones Industrial Average lost an average of 14 percent of its value in constant dollars.

Thursday, 17 August 2017

Markets rise as tensions over N Korea recede

Markets were mostly higher on Wednesday.

The S&P 500 rose 0.1 percent while the STOXX Europe 600 rose 0.7 percent but the Nikkei 225 fell 0.1 percent.

“Over the past couple of days we’ve seen a decent rebound in equity markets as risky assets start to regain some of their attraction, as concerns about tensions in North Korea show signs of settling down a little,” wrote Michael Hewson, chief market analyst at CMC Markets.

Indeed, a Bloomberg report noted that compared to other times in the last few years when the S&P 500 took one-day plunges of between 1 percent to 3 percent, the rebound since Thursday ranks among the fastest.

Wednesday, 16 August 2017

Most analysts think US market overvalued

Markets were mixed on Tuesday.

The Nikkei 225 jumped 1.1 percent, reversing the previous day's 1 percent decline, but the STOXX Europe 600 rose just 0.1 percent and the S&P 500 fell less than 0.1 percent.

The latest Bank of America Merrill Lynch Fund Manager Survey showed that a net 46 percent of respondents considered stocks overvalued, the biggest gap ever recorded in the survey.

At the same time, investors have lowered their expectations for corporate earnings, with a net 33 percent saying profits will improve over the next 12 months, down 25 percentage points from 2017.

However, long-time bull David Tepper, head of Appaloosa Management, does not seem to agree.

“Any comparisons to past overheated markets are ridiculous,” he told CNBC. “I'm not saying stocks are screaming cheap, but you're nowhere near an overheated market.”

Tuesday, 15 August 2017

Markets rise, earnings forecasts fall

Markets were mostly higher on Monday.

The S&P 500 rose 1.0 percent, the STOXX Europe 600 rose 1.1 percent and the Shanghai Composite rose 0.9 percent.

“After some short-term knee-jerk reactions last week, the market is having that moment of clarity rally—earnings are marching forward, the economy is strengthening, [and] global economic conditions are gaining steam,” said Karyn Cavanaugh, senior market strategist at Voya Financial.

Other analysts are not so sure.

Ryan Vlastelica at MarketWatch said that despite strong earnings growth in the second quarter, analysts have lowered S&P 500 earnings forecasts for 2018 by 0.2 percent since the end of June.

Monday, 14 August 2017

US stock market declines but bull run may not be over

The US stock market fell 1.4 percent last week but some bulls remain undaunted.

John Tobey suggested that “it's time to ride stocks and leave the worrying to others”.

Tobey said: “[T]his market is filled with concerns – its calm rise, higher valuations and the supposed complacency of others. Therefore, there is no bubble to pop.”

Instead, Tobey said that recent warnings about stock investing dangers are a “bullish indicator”.

He quoted Richard Barley as saying that “the real time to worry should be when no one is worried” and that “day has yet to arrive.

Similarly, Jeffrey Saut, Raymond James' chief investment strategist, recently said on CNBC that “it's still a secular bull market”.

However, Saut noted that there has been “some technical damage done” and that he is “not sure the downside is over with”.

Nevertheless, for the longer term, Saut said that earnings have been coming in better than expected and that should help drive the secular bull market.

Saturday, 12 August 2017

US stocks buck falling trend but still at risk

Markets were mostly lower on Friday.

Asian stocks plunged. With Japanese markets closed, the Hang Seng led the declines, tumbling 2 percent. The KOSPI fell 1.7 percent and the Shanghai Composite fell 1.6 percent.

European stocks fared little better. The STOXX Europe 600 fell 1.0 percent to its lowest close since 28 February.

Asian and European stocks were mostly reacting to ongoing tension between North Korea and the United States but US stocks managed to buck the trend as the S&P rose 0.1 percent after a report showed that US consumer prices rose just 0.1 percent last month.

“Because the numbers came in lower, the market saw that as an indication that the Fed won't raise rates in September,” said Robert Pavlik, chief market strategist at Boston Private.

Despite the rise on Friday, the S&P 500 ended the week down 1.4 percent.

Ryan Vlastelica at MarketWatch warned of the risk of “further losses ahead” for the US stock market.

Vlastelica noted that both the S&P 500 and the Nasdaq Composite fell below their 50-day moving averages on Thursday and failed to regain those levels on Friday.

“This isn’t a sign that you need to sell everything, but it is a sign you need to be more careful,” he quoted Frank Gretz, market analyst and technician for brokerage Wellington Shields & Co, as saying.

Friday, 11 August 2017

Markets plunge but strategists don't see bear market

Markets plunged on Thursday as geopolitical tension showed no sign of easing.

The S&P 500 fell 1.5 percent, the STOXX Europe 600 fell 1 percent and the MSCI Emerging Market Index fell 1.4 percent.

Government bonds rose. The US 10-year Treasury yield fell five basis points to 2.20 percent and the German 10-year yield fell two basis points to 0.41 percent.

“The markets in general are very on edge and they’re very leery about risk,” said Mariann Montagne, a portfolio manager at Gradient Investments LLC.

CNBC reported that many stock strategists see the possibility of a 5 percent correction for the US stock market but do not see the current selloff turning into a bear market.

“We don't think this is a bear market,” said Julian Emanuel, equity and derivatives strategist at UBS.

Sam Stovall, chief investment strategist at CFRA, said that economic and financial indicators “all tell me now we're not near a recession”.

Thursday, 10 August 2017

Markets fall as N Korea threatens strike on US

Markets fell on Wednesday.

The S&P 500 fell less than 0.1 percent, the STOXX Europe 600 fell 0.7 percent and the Nikkei 225 fell 1.3 percent.

Markets fell after North Korea threatened a missile strike on the US territory of Guam.

“Definitely the primary reason stocks are down is geopolitical tensions,” said JJ Kinahan, chief strategist at TD Ameritrade.

“A war is still far from erupting but given recent gains and pricey valuation, prudence suggests it’s best to capitalize on the rising geopolitical tension by taking some money off the table,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc.

Wednesday, 9 August 2017

Markets mixed as analysts see correction despite better earnings

Markets were mixed on Tuesday.

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

US stocks fell after President Donald Trump warned North Korea about facing “fire and fury” if the latter continued to threaten the US.

“The geopolitical tensions could be the catalyst for the market's direction in the next coming weeks depending on how it all shakes out,” said Robert Pavlik, chief investment strategist at Boston Private.

However, other analysts noted the underlying strength of the market.

“Earnings have been getting better and better,” trader Peter Costa said.

“You've got this underlying strength that is so broad-based and we haven't seen that and that's what's keeping this market aloft in this very steady upward trending motion,” said John Blank, chief equity strategist at Zacks Investment Research.

However, Chris Johnson, CEO of Johnson Research, said that “the market is still a little bubbly” and suggested waiting for “a bit more of a correction” before getting in.

That correction, though, might turn out to be somewhat more than many investors are thinking, according to Bank of America Merrill Lynch chief investment strategist Michael Hartnett.

“I think there will be a moment and quite a significant moment, probably in October or November, but it could be September, when the markets are going to correct and correct quite meaningfully,” he said.

Tuesday, 8 August 2017

US stocks hit record highs but “inflation could lead to unpleasant surprises”

Markets were mixed on Monday.

The S&P 500 rose 0.2 percent to a new record and the Nikkei 225 rose 0.6 percent. However, the STOXX Europe 600 slipped 0.1 percent.

Despite the US stock market's record-breaking run, some investors remain cautious.

“I’m cautious about what I’m doing,” said Robert Pavlik, chief market strategist at Boston Private Wealth. “I don’t need to chase the market, and nothing is exciting me enough to rush out and spend the cash I have on hand.”

Indeed, a CNBC report suggested that inflation poses an under-appreciated risk to the US stock market.

Scott Clemons, chief investment strategist at Brown Brothers Harriman, wrote in a recent report that “ignoring the risk of inflation, as remote as it may be, could lead to unpleasant surprises”.

Similarly, Bryce Doty, senior portfolio manager at Sit Investment Associates, wrote in an email to CNBC that investors are “unprepared for rising inflation”.

In addition to inflation, Gina Sanchez, CEO of Chantico Global, is concerned that growth expectations have “gotten ahead of reality” and “earnings could under-deliver”.

That, together with high market valuations, “could create a situation where investors should be considering consolidating their positions and getting into wait-and-see mode for the end of the year,” she told CNBC.

Monday, 7 August 2017

Dow at record high but “bearish trends lurking”

The Dow Jones Industrial Average closed on Friday at a record high, its eighth consecutive record.

MarketWatch charts the important Dow milestones.

Just over five months after hitting 21,000 and over six months since hitting the major 20K milestone, the Dow Jones Industrial Average made history again on Wednesday and closed above the 22,000 level. The 109-session surge to 22,000 is the eighth-fastest 1,000-point advance in the index’s history. It’s the third time the Dow has hit one of these psychologically important 1,000-point milestones this year.

See chart.

However, MarketWatch reports that beneath the glow of stock-market records, darkly bearish trends are lurking.

Market breadth, a measure of how many stocks are rising versus the number that are dropping, has turned “exceedingly negative”, according to Brad Lamensdorf, a portfolio manager at Ranger Alternative Management.

Saturday, 5 August 2017

Markets rise after positive US jobs report

Markets were mostly higher on Friday.

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

Markets were boosted by a report showing that the US economy gained 209,000 new jobs in July.

“European and U.S. markets are pushing higher after an overwhelmingly positive U.S. jobs report, despite the fact that this greatly increased the likeliness of a third and final interest rate hike by the Federal Reserve in 2017,” said IG market analyst Joshua Mahony in a note.

Jeff Zipper, managing director of investments at US Bank Private Client Wealth Management, said that with corporate results “coming in nicely”, stocks “will continue to grind higher until the end of the year”.

Friday, 4 August 2017

Markets mixed, pullback may have further to go

Markets were mixed on Thursday.

The Dow Jones Industrial Average rose marginally to close at another record high but the S&P 500 fell 0.2 percent.

The STOXX Europe 600 rose 0.1 percent. The FTSE 100 rose 0.9 percent but the DAX 30 fell 0.2 percent.

In Asia, the Nikkei 225 fell 0.3 percent but the KOSPI slumped 1.7 percent, dragged down by a 2.5 percent plunge in Samsung Electronics as its de facto head testified for the first time at his corruption trial.

“Investors are leaning a little bit more cautiously simply for the very, very near term because of bullish sentiment being higher than normal,” said Michael Antonelli, equity sales trader at Robert W. Baird & Co.

“We think this pullback has further to go,” said Deutsche Bank’s European equity strategists in a note on Thursday.

While valuations are keeping some investors cautious, Goldman Sachs said that there is one measure that suggests stocks may still be cheap.

The “S&P 500 is expensive according to most valuation metrics, but appears attractively valued on free cash flow yield due to reduced capex investment,” said Goldman's Chief US equity strategist David Kostin.

Thursday, 3 August 2017

Dow crosses 22,000 as investors ignore valuations

Markets were mixed on Wednesday.

In the US, the Dow Jones Industrial Average rose 0.2 percent to close above 22,000 for the first time but the S&P 500 edged up less than 0.1 percent and the Nasdaq Composite was flat.

Elsewhere, the STOXX Europe 600 fell 0.4 percent while in Asia, the Nikkei 225 rose 0.5 percent but the Shanghai Composite fell 0.2 percent.

“Valuations do look stretched relative to historical norms, but investors are looking a little farther out, and valuations don’t look that bad in that context,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management.

Investors in technology stocks, in particular, are ignoring valuations, according to Arjun Kharpal at MarketWatch.

He quoted an investor as saying last week: “forget about valuations, just own the damn thing”.

In contrast, a CNBC report noted that the tech sector has seen “a divergence between momentum and price action that signals the market may be getting reading to consolidate”.

Jason Hunter, head of fixed income and equities technical analysis at JPMorgan, suggested that the market is “setting up for a pullback in the next few weeks”.

Meanwhile, Brett Arends at MarketWatch suggested that investors could consider global stocks.

But be careful about Japanese stocks. Some analysts think that the months-long lull in Japanese equities could take an abrupt turn in the second half of the year.

Wednesday, 2 August 2017

Markets rise, Greenspan warns of bond bubble

Markets rose on Tuesday.

The S&P 500 rose 0.2 percent, the STOXX Europe 600 rose 0.6 percent and the Nikkei 225 rose 0.3 percent.

US Treasuries rose, with the yield on the 10-year note falling 3.9 basis points to 2.253 percent.

While some analysts attributed the low bond yields to low inflation, former Federal Reserve chairman Alan Greenspan warned that bonds are in a bubble.

“By any measure, real long-term interest rates are much too low and therefore unsustainable,” said Greenspan. “When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.”

Tuesday, 1 August 2017

Markets fall as analysts see trouble ahead for stocks

Markets were mostly lower on Monday.

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

The euro rose above US$1.18 for the first time since January 2015.

“The longer this U.S. dollar slump goes on, the more worrying it becomes. It is this that is behind the ongoing rise in the euro and sterling, and it is this that spells trouble ahead for stock markets as August looms,” said IG’s chief market analyst Chris Beauchamp in an note.

However, Avi Gilburt said that while a pullback is approaching, that pullback “will set up the next rally phase”, taking the S&P 500 “toward the 2,600 region into 2018”.

Strategas Research technical analyst Todd Sohn also warned that “there's a seasonal risk into August” but added that once October starts, “you usually see the bullish equities seasonals take over”.

However, for the longer term, analysts at Goldman Sachs said in its third-quarter outlook that annualised returns on the S&P 500 10 years out were in the single digits or negative 99 percent of the time when starting with valuations at current levels.

In light of this, Goldman suggested a look at international small caps, which it said are “well positioned to benefit from the global economic expansion”.

Monday, 31 July 2017

US stock market volatility at all-time lows amid “melt-up in earnings”

Many analysts are becoming nervous about the US stock market, according to a report by Joe Ciolli at Business Insider.

Ciolli quoted Marko Kolanovic, JPMorgan's global head of quantitative and derivatives strategy, as saying that all-time lows in market volatility “indicates that we may be very close to the turning point”.

Baupost Group was reported to have recently said that the lack of price swings is a possible “accelerant for the next financial crisis”.

Nevertheless, most analysts apparently do not see a major downturn in the market. Ciolli reported that a survey of 20 chief equity strategists conducted by Bloomberg showed an average year-end forecast of 2,439, basically unchanged from Friday's close.

And then, there are the bulls, like Edward Yardeni.

CNBC reported that Yardeni sees the recent record highs for the US stock market as being driven by “a melt-up in earnings”, which should be good for the rally.

“I think by the middle of next year we'll be looking at 2600-2700,” he said.

Saturday, 29 July 2017

Markets fall as low volatility seen signalling top

Markets fell on Friday.

The S&P 500 slipped 0.1 percent, the STOXX Euroipe 600 tumbled 1.1 percent and Japan's Topix fell 0.4 percent.

“Investors are becoming increasingly wary over the historically low volatility levels, with a host of key economic data coming out in the U.S.,” said Hideyuki Ishiguro, a senior strategist at Daiwa Securities Co.

Jeffrey Gundlach's DoubleLine Capital purchased some five-month put options on the S&P 500 recently.

Gundlach explained that the CBOE Volatility Index had been “really, really low”, and the trade was “like free money”.

Indeed, CNBC reported there is “more concern that the surge in stocks is running out of steam and a top is near”.

While equity funds took in $9.9 billion over the past week, the seventh straight week of inflows, Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, suggested that the pattern is now “becoming more consistent with [an] autumn top in risk assets”.

However, some analysts remain bullish.

Andrew Adams, an analyst at Raymond James, said that the current bull market has been relatively “lackluster” compared to bull markets of the past and said that “it's wrong to assume it has to end in spectacular fashion from current levels”.

Friday, 28 July 2017

Markets mixed amid jitters over valuations

Markets were mixed on Thursday.

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

Diane Jaffee, senior portfolio manager at TCW, said that “people are getting jittery about valuations”.

Indeed, CNN reported that the S&P 500 is trading at 2.1 times its trailing revenue. The last time it was higher was in September 2000 when it was at 2.2 as the dot-com bubble was popping.

Peter Boockvar, chief market analyst at The Lindsey Group, said that while valuations are “terrible short term market signals”, they “matter very much” in the long run.

However, Dan Heckman, senior investment strategist at US Bank Wealth Management, said the price-to-sales ratio is a “lagging indicator”, adding that while the market is not cheap, it is “not overly expensive either”.

Thursday, 27 July 2017

US stocks at record highs amid investor optimism seen as warning sign

Markets mostly rose on Wednesday.

The Dow Jones Industrial Average, STOXX Europe 600 and Nikkei 225 all rose 0.5 percent. The Dow, S&P 500 and Nasdaq Composite all closed at record highs.

US stocks shrugged off the Federal Reserve's announcement after its monetary policy meeting that it will start to reduce its holdings of government and mortgage debt “relatively soon”.

Kim Forrest, senior portfolio manager at Fort Pitt Capital, said that the market has been driven by corporate earnings, and that “so far we’ve had enough upside surprises” and “there is still room to grow” for the market.

Indeed, optimism is pervasive among investors. CNBC reported that bullishness in the most recent Investors Intelligence survey hit 60.2 percent, the highest level since late February.

Bears comprised just 16.5 percent of respondents.

“The latest sentiment is not encouraging for the rest of the year as markets rarely fulfill expectations,” John Gray, editor at II, wrote. “This is a new major warning calling for defensive measures to protect profits, renewing the same signal from earlier this year.”

Wednesday, 26 July 2017

S&P 500 at record high, “bull play still in place”

Markets were mostly higher on Tuesday.

The S&P 500 rose 0.3 percent to close at a record high and the STOXX Europe 600 rose 0.4 percent.

Early on Tuesday, however, Asian stocks finished mixed, with the Nikkei 225 falling 0.1 percent.

Terry Sandven, chief equity strategist at US Bank Wealth Management, said that “valuations are full, but we’re cautiously optimistic because earnings are increasing and the Federal Reserve remains accommodative”.

Ian Winer, head of the equities division at Wedbush Securities, concluded that “the bull play is still pretty much in place”.

Tuesday, 25 July 2017

Markets mixed as IMF leaves growth forecast unchanged

Markets were mixed on Monday.

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

Elsewhere, the STOXX Europe 600 fell 0.2 percent while in Asia, the Nikkei 225 fell 0.6 percent but the Shanghai Composite rose 0.4 percent.

The International Monetary Fund left its forecast for this year's global growth unchanged at 3.5 percent in its latest quarterly update to its World Economic Outlook but lowered its forecast for the US economy to 2.1 percent from 2.3 percent.

Meanwhile, though, US corporate earnings for the second quarter have been generally positive, according to Savita Subramanian, equity and quantitative strategist at Bank of America Merrill Lynch, with “the highest proportion of top and bottom-line beats at this point during earnings season in over five years”.

Monday, 24 July 2017

US stock market seen overvalued, may be at inflection point

The US stock indices saw mixed performances last week. The Dow Jones Industrial Average fell 0.3 percent but the S&P 500 rose 0.5 percent and the Nasdaq Composite rose 1.2 percent.

However, with US stock indices near record highs, 65 percent of investors think that the US stock market is overvalued, according to a quarterly investment manager survey performed by Northern Trust Asset Management. That is the highest since the survey began in the third quarter of 2008.

In contrast, 36 percent of investors think the US market is undervalued or fairly valued, the lowest reading on record.

Indeed, Mark Hulbert at MarketWatch pointed out last week that the volume of short selling has been increasing each month since last December.

That, according to a study he cited, suggests that the market may well be at or close to an “inflection point”.

Saturday, 22 July 2017

Markets fall as euro rises

Markets fell on Friday.

The S&P 500 slipped less than 0.1 percent but the Nikkei 225 fell 0.2 percent and the STOXX Europe 600 tumbled 1.0 percent as the euro hit a two-year high against the US dollar.

“The fear the European Central Bank will discuss the possibility of trimming its bond buying scheme later this year has driven investors to dump their eurozone equities,” said CMC Markets’ markets analyst David Madden. “To make matter worse, the relative strength of the euro is making eurozone stocks more expensive.”

In the US, the market was held back by General Electric, which fell 2.9 percent after reporting a drop in its second-quarter earnings and revenue.

“From an earnings perspective, it’s been kind of mixed so far and there is no earnings tailwind that investors had been expecting,” said Bruce Bittles, chief investment strategist at RW Baird & Co.

Still, Wayne Kaufman, chief market analyst at Phoenix Financial Services noted that “the breadth we saw in the Nasdaq over the rally speaks very well for what can happen down the road”.

Friday, 21 July 2017

Markets mixed as markets shrug aside Draghi's dovish message

Markets were mixed on Thursday.

While Asian stocks rose following the advances overnight in the US and Europe, the S&P 500 was flat and the STOXX Europe 600 fell 0.4 percent.

European stocks fell despite ECB President Mario Draghi saying at a Thursday press conference that a “very substantial degree of monetary accommodation is still needed”.

“Draghi’s trying to send as dovish a message as possible,” said Oanda’s senior market analyst Craig Erlam. “Markets aren’t buying it anymore.”

Nevertheless, Jeffrey Saut, chief investment strategist at Raymond James, remains sanguine. He wrote in a note that “any downside pressure should continue to be muted while the conditions by the end of next week favor the upside”.

Thursday, 20 July 2017

US stocks at new record highs, expected to continue to do well

Markets rose on Wednesday.

The S&P 500 rose 0.5 percent to close at an all-time high, the STOXX Europe 600 rose 0.8 percent and the Nikkei 225 rose 0.1 percent.

“Corporate earnings have been fantastic this quarter, which is shaping up to be one of the best we’ve had in a long time,” said John Bailer, senior portfolio manager at the Boston Company.

Jim Paulsen, chief investment strategist at The Leuthold Group, told CNBC that there is a “Goldilocks sort of economy going” and so “stocks will continue to do well”.

Some technical analysts also seem to think so, according to another CNBC report.

Paul LaRosa, chief market technician at Maxim Group, sees “higher prices in the near-term”.

Scott Redler, partner with T3Live.com, said: “The summer time rally might have just gotten new energy, and energy could be the focus.”

Art Hogan, chief market strategist at Wunderlich Securities, said: “If you're looking for positives, some of the key factors have been established, whether it's yields on the 10-year or commodities prices.”

Wednesday, 19 July 2017

US stocks at new high, other markets fall

Markets were mixed on Tuesday.

The S&P 500 edged up less than 0.1 percent to a new record but the STOXX Europe 600 fell 1.1 percent and the Nikkei 225 fell 0.6 percent.

US stocks managed to shrug off the collapse of President Donald Trump's health-care bill.

Maris Ogg, president at Tower Bridge Advisors, said that “the bigger picture remains positive” for stocks.

Tuesday, 18 July 2017

Chinese stocks plunge but economy grows more than expected

Markets were mostly flat on Monday, with both the S&P 500 and the STOXX Europe 600 finishing little-changed.

However, Chinese stocks fell sharply. The Shanghai Composite fell 1.4 percent while the Shenzhen Composite plunged 4.3 percent.

At the end of last week, policy makers at the National Financial Work Conference mentioned “risk” 31 times and “regulation” 28 times, noted Jack Siu, an investment strategist for Asia-Pacific at Credit Suisse.

“There’s a couple of small midcap companies that suddenly changed their guidance from profit to significant loss and I don’t think that was expected by the market,” said Caroline Yu Maurer, head of Greater China equities at BNP Paribas Investment Partners.

Chinese stocks pared losses after a report showed that the economy grew 6.9 percent in the second quarter from a year earlier, better than the 6.8 percent consensus estimate from a Bloomberg survey.

Monday, 17 July 2017

Strong earnings growth could push US stock market to new records

US stocks rose last week. Among the major stock indices, the biggest gainer was the Nasdaq Composite, which rose 2.6 percent. The S&P 500 rose 1.4 percent to close at a record high.

Some analysts think that US stock indices could hit new records in coming weeks, propelled by strong earnings growth.

Karyn Cavanaugh, senior market strategist at Voya Financial, predicted earnings growth of 6 to 7 percent for the second quarter.

“The canary in the coal mine is earnings and the canary is singing a very sweet song right now,” said Cavanaugh.

Saturday, 15 July 2017

Markets rise as US data point to dovish Fed

Markets were mostly higher on Friday.

The S&P 500 rose 0.5 percent to close at a record high, the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 edged up 0.1 percent.

US economic data released on Friday showed that the consumer price index was unchanged in June, retail sales fell 0.2 percent and industrial production rose 0.4 percent.

“I think this morning’s economic data once again plays into the narrative that the Fed will be more dovish,” said Ian Winer, head of the equities division at Wedbush Securities.

Friday, 14 July 2017

Stocks could crash from Fed liquidity drain

Markets rose on Thursday.

The S&P 500 rose 0.2 percent while the Dow Jones Industrial Average rose 0.1 percent to log its 24th record of 2017.

According to a CNBC report, the US stock market's rally despite political uncertainty is not unusual by historical standards.

However, Nigam Arora thinks that stocks could crash if the Federal Reserve's attempt to drain liquidity from the financial system ends up harming the economy or securities.

Thursday, 13 July 2017

Markets rise but dovish Yellen could still prick asset bubble

Markets mostly rose on Wednesday.

The S&P 500 rose 0.7 percent and the STOXX Europe 600 jumped 1.5 percent. However, the Nikkei 225 fell 0.5 percent.

Markets were somewhat buoyed by Federal Reserve Chair Janet Yellen's testimony to the US Congress.

Karyn Cavanaugh, senior market strategist at Voya Financial, noted of her testimony: “She’s back to looking at inflation a little bit more. The market was a little worried but she’s back to the same dovish Yellen.”

Still, Thomas Kee Jr wrote at MarketWatch that with the US stock market already “66% higher than it should be”, Fed monetary tightening could “prick the asset bubble that the market is in today”.

Wednesday, 12 July 2017

Markets mixed amid renewed US political concerns

Markets were mixed on Tuesday.

The S&P 500 fell less than 0.1 percent but the Nasdaq Composite rose 0.3 percent.

Elsewhere in the world, the STOXX Europe 600 fell 0.7 percent but the Nikkei 225 rose 0.6 percent.

Political concerns over US President Donald Trump's dealings with Russia sent stocks tumbling in late-morning US trading but they recovered later as US Senate Republican leader Mitch McConnell announced a two-week delay in the Senate's August recess to provide more time to work on legislation and approve nominees.

Brad McMillan, chief investment officer for Commonwealth Financial, said that the Senate's delayed break "says to me there's a commitment to make some of the changes that the markets would like to see".

Tuesday, 11 July 2017

Markets rise but “monetary tightening a threat”

Markets rose on Monday.

The S&P 500 rose 0.1 percent, the STOXX Europe 600 rose 0.4 percent and the Nikkei 225 rose 0.8 percent.

US oil prices edged up and the US 10-year Treasury yield fell one basis point to 2.375 percent.

“Central banks are likely to remain a key focus for investors this week, with the sudden hawkish shift among a number of them in recent weeks pushing bond yields higher and weighing on risk appetite,” said Craig Erlam, senior market analyst at Oanda.

Indeed, CNBC reported that Citigroup strategists have noted that “monetary tightening could be a threat if central banks are perceived to have got ahead of the curve”.

“For now, however, the team believes that there is sufficient earnings momentum to warrant further gains in equity markets, particularly in Europe and Japan,” the strategists added.

JPMorgan strategists, though, warned that the second half of the year “is where the problems could materialize in earnest” if earnings fail to match analysts' elevated expectations.

Monday, 10 July 2017

US stock market set for "big fall in autumn"

Bank of America Merrill Lynch thinks that the US stock market rally may come to an end in the coming months.

Reuters reported last week:

In their weekly round up of global asset flows, BAML said the prospect of more U.S. rate hikes, combined with the ECB readying to scale back its stimulus, meant markets were at a "massive inflection point" in the decade-long easy money trade...

"Next 6 months, higher interest rates likely much more negative for stocks & credit given new central bank policies," its strategists wrote. "Will likely lead to 'Humpty Dumpty' big fall in market in autumn, in our view."

Saturday, 8 July 2017

US stocks rise after solid employment report

Markets were mixed on Friday.

The S&P 500 rose 0.6 percent but the STOXX Europe 600 fell 0.1 percent and the Nikkei 225 fell 0.3 percent.

US stocks were boosted by a report showing that the economy added 222,000 jobs in June, better than the forecast of 180,000.

Charlie Ripley, investment strategist at Allianz Investment Management US, said in a note that “the solid employment data should keep the Fed on course for policy normalization”.

However, oil fell. West Texas Intermediate crude fell 2.8 percent while Brent fell 2.9 percent.

Friday, 7 July 2017

Markets fall as central banks shift policies

Markets fell on Thusday.

The S&P 500 fell 0.9 percent, the STOXX Europe 600 fell 0.7 percent and the Nikkei 225 fell 0.4 percent.

“Traders are sensing a shift in central banker’s policies,” said David Madden, market analyst at CMC Markets.

“People are nervous about bond yields going up and you can see that in exaggerated moves in technology stocks and financials,” said Ian Winer, head of the equities division at Wedbush Securities.

Not all analysts are concerned though.

“The market is not getting too panicky just yet,” noted Chris Beauchamp, senior market analyst at IG.

“The Fed has raised rates three times in the last seven months. The markets haven't squeaked,” said Credit Suisse International Wealth Management CIO Michael O'Sullivan.

Mike Antonelli, equity sales trader at Robert W Baird & Co, said: “People should not mistake rotation for volatility, and I am not terribly freaked out as investors are not selling everything equally.”

Thursday, 6 July 2017

Stocks rise as oil plunges, tech stocks still at risk

Markets mostly rose on Wednesday.

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

However, oil fell. West Texas Intermediate crude plunged 4.1 percent and Brent tumbled 3.7 percent.

“We’re seeing vicious rotations in certain sectors,” said Wedbush Securities’s head of the equities division Ian Winer. “Oil’s getting killed and there’s a rotation into biotech and semiconductors.”

However, Nigam Arora wrote in MarketWatch that it is still not time to jump back into popular tech stocks while Larry McDonald wrote in The Bear Traps Report that there are signs the tech sector's out-performance may be coming to an end

Wednesday, 5 July 2017

Markets fall after N Korea missile test but sentiment near euphoria

With the US market closed for a holiday on Tuesday, markets in Europe and Asia fell.

The Nikkei 225 fell 0.1 percent while the STOXX Europe 600 fell 0.3 percent.

Investor sentiment was hurt by a report that North Korea had successfully test-fired an intercontinental ballistic missile.

The missile test damped sentiment that, according to Mark DeCambre at MarketWatch, had just hit a 6-year high.

“Optimism reached its highest level on Wall Street since 2011 in June, according to strategists at BofA Merrill Lynch, including equity and quantitative strategists Savita Subramanian and Dan Suzuki,” he wrote.

“The recent inflection from skepticism to optimism could be the first step toward the market euphoria that we typically see at the end of bull markets and that has been glaringly absent so far in the cycle,” he quoted BofA as saying.

Tuesday, 4 July 2017

Markets rise, could “scream higher” before “some ugliness” in late 2018

Markets rose on Monday.

The S&P 500 rose 0.2 percent, the STOXX Europe 600 jumped 1.1 percent and the Nikkei 225 rose 0.1 percent.

John Manley, chief equity strategist at Wells Fargo Funds Management, said that the investment environment is “reasonably good” and that while valuations are high, “they are kind of on the low end of high”.

Energy stocks led gains in the US as oil rose for the eighth consecutive session. West Texas Intermediate crude rose 2.2 percent and Brent rose 1.9 percent.

However, US tech stocks fell, with the Nasdaq Composite declining 0.5 percent.

Technical analyst Tom McClellan, though, thinks stocks are set to roar higher.

“We're still in an uptrend,” he told CNBC on Monday.

However, with the spread between the US 10-year Treasury and the 10-year German bund starting to narrow, he sees a likelihood of “some ugliness” starting in late 2018.

Monday, 3 July 2017

US stock gains seen limited in second half

Market strategists appear to be going against history and are calling for minimal gains for the US stock market in the second half of 2017.

Bloomberg reported that after a 8.2 percent rise in the S&P 500 in the first half of the year, strategists see the index rising by just 0.6 percent in the second half, the least bullish forecast for this time of year since 1999.

This is in contrast to the historical performance of the S&P 500. During the years when the S&P 500 went up between 7 percent and 12 percent in the January-June period, stocks went on to rise 87 percent of the time in the next six months, with increases averaging 5.1 percent.

The lack of optimism among strategists does not faze long-time bull Laszlo Birinyi, president of Birinyi Associates.

“New highs are generally greeted with a yawn,” Birinyi wrote to clients last week. “As the year proceeds, we are actually feeling better about the market.”

Saturday, 1 July 2017

Markets mixed, US stocks' hot streak at risk

Markets were mixed on Friday.

The S&P 500 rose 0.2 percent but the STOXX Europe 600 fell 0.3 percent and the MSCI Asia Pacific Index fell 0.7 percent.

Oil rose, with WTI crude jumping 2.9 percent.

Bonds fell. The yield on the US 10-year Treasury note rose three basis points to 2.30 percent.

The advance on Friday left the S&P 500 with a 2.6 percent gain for the second quarter.

Alex Rosenberg at CNBC noted that the second quarter was the S&P 500's 16th winning quarter out of the past 18.

He wrote that there have only been six prior four-and-a-half-year periods in which the S&P 500 rose in 16 quarters or more, and all of them came in the periods that ended between the fourth quarter of 1998 and the first quarter of 2000.

“That is to say, the S&P 500 hasn't performed this dependably since the dotcom bubble,” he said.

However, the streak may be about to end.

“The S&P is and has been overbought for a long while. It should slump,” he quoted Max Wolff of 55 Institutional as saying in an email on Thursday.

Friday, 30 June 2017

Markets fall amid signs central banks turning hawkish

Markets mostly fell on Thursday.

The S&P 500 fell 0.9 percent and the STOXX Europe 600 fell 1.3 percent.

Earlier on Thursday though, the Nikkei 225 rose 0.4 percent.

Global bonds fell as investors became concerned that other major central banks may be joining the Federal Reserve in tightening monetary policies.

“In recent days, there have been hawkish indications from the ECB’s Draghi, the Bank of England’s Carney and Bank of Canada’s Poloz, all of which have signaled a potential end to their easing programs could be close,” said Richard Perry, market analyst at Hantec Markets.

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.”