Friday, 23 September 2016

Stocks rise as central banks maintain monetary support

Markets rose on Thursday.

The S&P 500 rose 0.76 percent, the STOXX Europe 600 jumped 1.6 percent and the Shanghai Composite Index gained 0.5 percent.

The yield on the US 10-year Treasury note fell to 1.630 percent from 1.668 percent on Wednesday.

US crude oil rose 2.2 percent.

“The market has come to the conclusion that everything is fine: central banks are still there, supporting equity markets and keeping yields low,” said Daniel Morris, an investment strategist at BNP Paribas Investment Partners.

“Crossing Wall Street” blog editor Eddy Elfenbein told CNBC that the Federal Reserve keeping rates low “really favors stocks right now”.

However, Chantico Global founder Gina Sanchez thinks that “the market's not really pricing for” a December hike and that investors “should really think about taking some profits”.

Fidelity Investment's director of global macro Jurrien Timmer said on CNBC that, in any case, investors should not expect a significant rally until earnings growth returns.

However, a return of earnings growth is exactly what Wells Capital Management's Jim Paulsen expects. He told CNBC that he expects earnings growth to return in the second half of this year. “I think the market can handle rate increases as long as earnings return,” he added.

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