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.

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