Thursday, 7 November 2019

Markets rise but sentiment may reverse as US-China trade deal delayed

Markets were mostly higher on Wednesday.

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

A report that said an interim trade deal between the US and China could be delayed until December deflated market sentiment somewhat.

“The market may take a breather from here,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Stephen Innes, market strategist at AxiTrader, said that “with delay comes chance that risk-on sentiment has too long to ferment, stalls and then maybe reverses as the waiting game weighs”.

Indeed, Samantha LaDuc, founder of LaDucTrading and chief investment officer of LaDuc Capital LLC, wrote on MarketWatch that “there is very little reason to expect a breakout with follow-through but more likely a breakdown”.

“I suspect bonds are about to roll over, structurally force yields to pop, then oil spikes with reflation trades, while momentum stocks are sold off because they’re overvalued relative to value plays …and the result is the stock markets correct,” she wrote.

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