Wednesday, 28 February 2018

Markets fall as new Fed chair Powell says inflation moving up

Markets mostly fell on Tuesday.

The S&P 500 plunged 1.3 percent, the STOXX Europe 600 fell 0.2 percent and the Shanghai Composite tumbled 1.1 percent. However, the Nikkei 225 jumped 1.1 percent.

The yield on the US 10-year Treasury note rose 4.8 basis points to 2.910 percent.

Weighing on markets was Federal Reserve Chairman Jerome Powell's congressional testimony, which highlighted the strengthening economy.

“We’ve seen some data that will, in my case, add some confidence to my view that inflation is moving up to target,” said Powell.

“Market participants interpreted Powell’s comments being hawkish, specifically that there may be more than three rate increases on the cards,” said Ryan Larson, head of equity trading at RBC Global Asset Management.

Tuesday, 27 February 2018

US stocks jump but face "more downside risk over the next few weeks"

The S&P 500 rose 1.2 percent on Monday, leaving it just 3.25 percent below its 52-week intraday high.

Despite the impressive rally, some analysts are not convinced that the rebound so far is sustainable.

Matt Maley, equity strategist at Miller Tabak, wrote on CNBC that the "bounce has been nothing more than what we typically see on the heels of a miniature 'crash'".

Chris Watling, chief executive of Longview Economics, told CNBC that market models show a "third wave" of the market correction is coming.

"There's huge complacency," he said, adding that "there's probably some more downside risk over the next few weeks".

Saturday, 24 February 2018

Markets rise but “premature” to say pullback is over

Markets rose on Friday.

The S&P 500 surged 1.6 percent, the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 rose 0.7 percent.

JJ Kinahan, chief strategist at TD Ameritrade, called the Friday move in US stocks “very impressive”.

Doug Cote, chief market strategist at Voya Investment Management, is optimistic on stocks, suggesting that the rise in interest rates “is a sign that secular stagnation, disinflation…are finally in the rearview mirror”.

However, Shane Oliver, head of investment strategy and chief economist AMP Capital, said it is “premature” to conclude that the pullback is over “as it will take a while for markets to adjust to higher inflation, a more aggressive Fed and higher bond yields”.

Friday, 23 February 2018

Markets mixed as investors see possible peak

Markets were mixed on Thursday.

The S&P 500 edged up 0.1 percent but the STOXX Europe 600 fell 0.2 percent and the Nikkei 225 tumbled 1.1 percent.

A report on Thursday showed that initial US jobless claims fell by 7,000 to 222,000 in the week ended 17 February, marking the second lowest level since the end of the 2007-2009 recession.

Steven Baffico, chief executive officer at Four Wood Capital Partners, said: “In general, the broader economic conditions continue to improve.”

That did not stop nearly half of hedge-fund investors from thinking that the stock market has peaked.

Indeed, David Tice, former manager of the Prudent Bear Fund, told CNBC on Wednesday that the February correction is just a foreshock and that the US stock market could be 20 to 25 percent lower by the end of 2018.

“I feel like the weight of the evidence is that we've broken a tectonic plate,” he said.

Thursday, 22 February 2018

Markets mixed after Fed minutes show “increased likelihood” of rate hikes

Markets were mixed on Wednesday.

The S&P 500 fell 0.6 percent after being up as much as 1.2 percent earlier.

However, the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 rose 0.2 percent.

US stocks were dragged down by rising yields, with the 10-year Treasury yield hitting a four-year peak of 2.95 percent after the minutes of the last Federal Open Market Committee meeting pointed to the “increased likelihood” of more rate hikes ahead.

Some analysts were sanguine about the outlook on inflation though.

“I think for the most part everything in the minutes was fairly benign,” said Bruce McCain, chief investment strategist at Key Private Bank.

“Demographics are such that we have 10,000 people retiring every day and being replaced by younger employees with lower salaries,” said Bruce Bittles, chief investment strategist at Baird, who was doubtful that real inflation was picking up.

Wednesday, 21 February 2018

US stocks fall as bond yields rise but big test yet to come

Markets were mixed on Tuesday.

The S&P 500 fell 0.6 percent, snapping a six-day winning streak, while the Nikkei 225 fell 1 percent. However, the STOXX Europe 600 rose 0.6 percent.

Higher bond yields put pressure on stocks on Tuesday, but a report by Credit Suisse says that stocks actually have little to fear from higher interest rates.

“Year-to-date, if you invested only on dates when interest rates went up, your annualized return would be 16 percent,” said Jonathan Golub, chief US equity strategist at Credit Suisse.

Golub said stocks should respond positively to higher yields until they reach a level around 3.5 percent.

Still, Morgan Stanley strategists warned in a note on Monday that a bigger test for stocks from higher bond yields is yet to come.

“It’s when growth softens while inflation is still rising that returns suffer most,” the strategists wrote. “Strong global growth and a good first-quarter reporting season provided an important offset. We remain on watch for ‘tricky hand-off’ in the second quarter, as core inflation rises and activity indicators moderate.”

Tuesday, 20 February 2018

Stocks fall in Europe, surge in Japan, fundamentals in US “best it's been”

Markets were mixed on Monday.

The STOXX Europe 600 fell 0.6 percent, its first decline in four days, as Germany’s 10-year yield increased three basis points to 0.73 percent, the largest increase in more than a week.

However, earlier in the day, the Nikkei 225 surged 2 percent to the highest in two weeks, as the yen sank 0.3 percent to 106.56 per dollar, the largest decrease in almost two weeks.

Markets in the US, China and Hong Kong were closed for holidays.

US stocks may be set for more gains after the holidays. BlackRock strategists have raised them to overweight because fiscal stimulus is “supercharging U.S. earnings growth expectations”, with Kate Moore, BlackRock's chief equity strategist, saying that “the fundamental story is the best it's been”.

Monday, 19 February 2018

Stocks may have seen bottom

The S&P 500 rose 4.3 percent last week, its best weekly performance since January 2013.

The strong performance last week is giving some analysts hope that the stock market is back on a winning path.

Technical analyst Tom Aspray at Forbes wrote over the weekend that “the odds of a V-shaped bottom have increased”.

“I would expect the market to consolidate for a day or two this week before turning higher,” he wrote. “A strong weekly close with positive market internals will be a further sign that a V-shaped bottom is in place.”

Monica DiCenso, global investment specialist at JP Morgan Private Bank, told CNBC that the stock market could gain “11 to 13 percent from here, which of course in the context of history is very strong”.

“Look at earnings growth, you look at the growth in the economy and really you look at everything we heard from companies through this past earnings season, it's all been really good,” she said.

Saturday, 17 February 2018

Markets rise as fundamentals seen strong but further turbulence possible

Markets rose on Friday.

The S&P 500 finished barely higher but the STOXX Europe 600 jumped 1.1 percent and the Nikkei 225 surged 1.2 percent.

Fiona Cincotta, market analyst at City Index, said in a note that the rebound in stocks shows that “the market has quickly adjusted to the prospect of higher future inflation and a more hawkish Fed”.

Wayne Kaufman, chief market analyst at Phoenix Financial Services, said that the “fundamentals remain strong and people are responding to that.”

Mark Martiak, senior wealth strategist at Premier Wealth/First Allied, said that “fundamentals will rule the day and that the recovery is sustainable”.

However, Jim Paulsen, chief investment strategist at The Leuthold Group, is more cautious.

“I think there's going to be more turbulence at some point this year,” Paulsen told CNBC on Friday. “I think we could have a 15 percent correction.”

Friday, 16 February 2018

Markets rise, getting “comfortable” with inflation

Markets rose on Thursday.

The S&P 500 rose 1.2 percent, the STOXX Europe 600 rose 0.5 percent and the Nikkei 225 jumped 1.5 percent.

Leo Grohowski, chief investment officer of BNY Mellon Wealth Management, said that “the market is becoming more comfortable with the idea that a little bit of inflation will be OK”.

Joe Quinlan, head of thematic strategy at Bank of America Global Wealth and Investment Management, said “there is no need to panic” as non-recessionary market pullbacks “tend to be relatively short-lived”.

Thursday, 15 February 2018

Stocks jump despite higher US inflation, “worst is over”

Markets mostly rose on Wednesday.

The S&P 500 rose 1.3 percent while the STOXX Europe 600 rose 1.1 percent.

Earlier in Asia, the Nikkei 225 fell 0.4 percent but the Hang Seng surged 2.3 percent.

Markets were able to shake off a report on Wednesday that showed that US consumer prices rose 0.5 percent in January, the biggest increase in five months.

“Anything with inflation seems like a hot button nowadays, but it is a bit of a red herring here: Higher inflation and higher rates are symptoms of economic health,” said Karyn Cavanaugh, senior market strategist at Voya Financial.

“Clearly with this kind of a movement for the fourth day in a row, it does appear that it’s reasonable to assume that the worst is over at this point,” said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.

Tuesday, 13 February 2018

Markets continue rebound as some see pullback as overdone

Markets rose on Monday.

The S&P 500 surged 1.4 percent, the STOXX Europe 600 jumped 1.2 percent and the Shanghai Composite rose 0.8 percent.

Despite the rebound in the last two trading sessions, Kent Engelke, chief economic strategist at Capitol Securities Management Inc, said he found the recent volatility “paralyzing”.

“Over the short term, the selloff is likely to persist for the next few weeks because we are still in an adjustment period with people focusing on inflation data,” said Lisa Erickson, head of traditional investments for U.S. Bank Wealth Management.

Still, some strategists are optimistic.

“We may have moved from being ‘overdue’ for a pullback to approaching ‘overdone,’” Mark Haefele, the Zurich-based global chief investment officer for UBS Wealth Management, said in a note to clients.

Steven Andrew, a London-based multi-asset fund manager at M&G Investments, said: “Our predisposition would be to add equity exposure.”

Monday, 12 February 2018

Tighter monetary policy could lead to “big bear market”

The S&P 500 fell 5.2 percent last week.

While some investors are looking for a bottom to the sell-off, others are warning of a possible bear market.

“Our ongoing concerns about the recovery's tenure have been thrown into sharper focus by the steepest market sell-off since the credit crunch,” Eoin Murray, head of investment at Hermes Investment Management, said in a research note last week.

“Central bank tightening, or at least the end of post-crisis monetary accommodation, will undoubtedly prove challenging,” added Murray.

“The real issue is that we are at an inflection point in capital markets,” said Michele Gesualdi, chief investment officer at Kairos Investment Management, told CNBC last week.

Gesualdi said that an expected move to quantitative tightening in the summer would likely trigger increased market volatility and that a “big bear market” was on the horizon.

Saturday, 10 February 2018

US stocks rebound as investors look for a bottom

Markets were mixed on Friday.

The S&P 500 recovered from an early slide to finish up 1.5 percent. Earlier in the day, the STOXX Europe 600 fell 0.7 percent and the Nikkei 225 plunged 2.3 percent.

Despite the rebound on Friday, the S&P 500 still ended the week down 5.2 percent.

Bruce McCain, chief investment strategist at Key Private Bank, said that “we need to form a pretty stable base before investors can feel reassured the bottom won’t fall out from under them, and it will take some more price action before that occurs”.

Stephen Gandel at Bloomberg suggested that “a reasonable floor for stocks isn't much lower, about 2 percent, which could be why they were rallying on Friday”.

However, David Rosenberg, chief economist and strategist at Gluskin Sheff, noted that the recent correction occurred even as the US 10-year Treasury yield rose 16 basis points.

“This rare occurrence of bond yields rising even as stock markets decline was a feature in 1987 and 1994,” he said. “One of these years had a huge correction and one had massive volatility and rolling corrections. Pick your poison.”

Friday, 9 February 2018

S&P 500 plunges big-money players “in full panic mode”

Markets fell again on Thursday.

The S&P 500 plunged 3.8 percent, the STOXX Europe 600 tumbled 1.6 percent and the MSCI Emerging Market Index fell 1.2 percent.

West Texas Intermediate crude fell 2.2 percent.

Germany’s 10-year yield climbed two basis points to 0.76 percent, the UK's 10-year yield climbed seven basis points to 1.617 percent but the US 10-year Treasury yield fell less than one basis point to 2.83 percent.

“There’s some big-money players that have really leveraged to the low rates forever, and they have to unwind those trades,” said Doug Cote, chief market strategist at Voya Investment Management. “They could be in full panic mode right now.”

Tuesday, 6 February 2018

Stocks plunge in “panicky” selloff but “doesn’t mean the bull market is over”

Markets plunged on Monday.

The S&P 500 tumbled 4.1 percent, turning negative for the year. The STOXX Europe 600 fell 1.6 percent and the Nikkei 225 fell 2.5 percent.

“Unlike Friday, when selling was orderly and not on a huge volume, today’s selloff was definitely panicky,” said Joe Saluzzi, partner, co-head of Equity Trading at Themis Trading.

However, Randy Frederick, vice president of trading and derivatives for Charles Schwab, said that a pullback was both “expected and healthy” and “doesn’t mean the bull market is over”.

Indeed, Ed Yardeni, president of Yardeni Research, said that President Donald Trump's tax cuts will pull stocks out of their current tailspin.

“One of these days, the panic attack will be the beginning of a bear market. But I don't think this is it,” he said.

Monday, 5 February 2018

Despite biggest weekly decline in 2 years, US stocks not seen in bear market

The S&P 500 fell 3.9 percent last week, its biggest weekly decline in two years.

However, at least some investors are not worried.

“The pullback is likely to be just an overdue correction, with say a 10 percent or so fall, rather than a severe bear market,” said Shane Oliver, global investment strategist at AMP Capital.

“This move may yet turn out to be the start of something more significant, but so far it is pretty limited and it is likely that buyers will step in before we get near ‘real’ correction levels,” said Patrik Schowitz, global multi-asset strategist at JPMorgan Asset.

Saturday, 3 February 2018

Stocks plunge as US jobs report raised propects for higher interest rates

Markets fell on Friday.

The S&P 500 plunged 2.1 percent, its biggest one-day drop since September 2016. The STOXX Europe 600 tumbled 1.4 percent, its biggest one-day percentage loss since September 2016. The Nikkei 225 fell 0.9 percent.

The US employment report on Friday showed that the economy added 200,000 jobs in January, raising expectations of tighter monetary policy by the Federal Reserve.

“A big wage growth number is the biggest risk to the stock market rally, because it means the Fed may get more aggressive in raising interest rates,” said Kristina Hooper, chief global market strategist at Invesco.

The decline in stocks comes as strategists at Bank of America Merrill Lynch recommended that investors sell risk assets after its Bull & Bear indicator surged to 8.6 over the past week into “extreme bullish” territory.

Friday, 2 February 2018

Markets mixed, faces correction as challenges “mounting”

Markets were mixed on Thursday.

In the US, the S&P 500 fell 0.1 percent but the Dow Jones Industrial Average rose 0.1 percent.

Elsewhere, the STOXX Europe 600 fell 0.5 percent, with the DAX 30 tumbling 1.4 percent, but in Asia, the Nikkei 225 surged 1.7 percent.

Bonds fell, with the US 10-year Treasury yield hitting 2.78 percent, a three-year high.

Robert Pavlik, chief investment strategist at SlateStone Wealth LLC, said reflationary fears may be causing concerns, while Chris Weston, chief market strategist at IG, sees the Federal Reserve raising interest rates four times in 2018, starting in March.

Jim Paulsen, chief investment strategist at Leuthold Group, also sees four rate hikes this year and sees the possibility of a 15 percent correction in the stock market.

“Challenges are mounting here for stocks,” said Paulsen. “And for bonds, I think.”

Thursday, 1 February 2018

Stocks shrug off Fed inflation expectations as Greenspan sees market bubbles

The US stock market rose on Wednesday, the S&P 500 rising 0.1 percent.

US stocks briefly went negative after the Federal Reserve left interest rates unchanged at its meeting but said it expected inflation to move “up this year and to stabilize” around its 2 percent target.

The subsequent stock market recovery left the S&P 500 with a gain of 5.6 percent for January, its best monthly performance since March 2016.

A former Fed chairman, though, is not particularly sanguine about markets.

Alan Greenspan told Bloomberg on Wednesday that bubbles have emerged. “There are two bubbles: We have a stock market bubble, and we have a bond market bubble,” he said.