Markets mixed but “worst of pullback may be behind us”

Markets were mixed on Monday.

In the US the S&P 500 dipped 0.1 percent but the Nasdaq Composite rose 0.4 percent to a record high.

Elsewhere, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 surged 1.7 percent.

“Global markets continue to advance after Friday’s U.S. employment numbers effectively gave the green light to investors to buy equities,” said Rebecca O’Keeffe, head of investment at Interactive Investor, in a note. “Goldilocks appears to be alive and well.”

“The underlying macroeconomic backdrop is still pretty intact, and stocks continue to be supported by good earnings,” said Michael Mullaney, director of global markets research at Boston Partners. However, he added: “I can’t think of an asset class that’s inexpensive, so any values out there are relative.”

Indeed, Ryan Vlastelica at MarketWatch reported that Morgan Stanley thinks that “it will prove difficult for the S&P 500 to trade outside of the 16-18x forward 12 month [price-to-earnings] range for the remainder of 2018” and that the high hit in January and the low reached in February “about established the high and low end of valuations for U.S. equity markets” for the rest of the year.

Still, Vlastelica noted “improvements in market breadth and other technical factors” for the S&P 500. He quoted Sameer Samana, global equity and technical strategist at Wells Fargo Investment Institute, as suggesting that “the worst of the pullback may now be behind us”.