Wednesday, 30 August 2017

US stocks rise but opportunities look better elsewhere

Markets were mixed on Tuesday.

The S&P 500 rose 0.1 percent but the STOXX Europe 600 fell 1.0 percent and the Nikkei 225 fell 0.5 percent.

European and Asian markets tumbled after North Korea fired a ballistic missile over Japan but US stocks recovered from early losses after President Donald Trump responded that “all options are on the table”, suggesting a measured reaction.

While the US stock market performed best on Tuesday, many analysts think that markets elsewhere offer better prospects.

“The opportunity set is larger overseas, and the current valuation of international equity markets remains attractive in comparison to that of the United States,” wrote Luis Alvarado, an investment strategy analyst at Wells Fargo Investment Institute, last week.

Prospects appear especially strong for emerging markets. Ryan Vlastelica at MarketWatch reported that emerging market stocks have outperformed in 2017, with the iShares MSCI Emerging Markets ETF up more than 27 percent so far this year.

Ryan Detrick, senior market strategist at LPL Financial, said that emerging markets have broken above a “10-year bearish trendline”. He added that the strenth “could continue” amid “a big pickup in corporate earnings” and modest valuations relative to the rest of the world.

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