Stocks mixed, risk assets may be driven “a lot higher” by year’s end

Markets were mixed on Monday.

The STOXX Europe 600 rose 0.3 percent and the Shanghai Composite jumped 1.3 percent but the Nikkei 225 fell 0.4 percent.

US markets were closed for a holiday.

Economic data were relatively positive.

The Caixin/Markit China manufacturing PMI for August was 50.4, better than expected and indicating an expansion, in contrast to the government PMI released over the weekend.

While the eurozone manufacturing PMI showed a contraction in August, it rose to 47.0 from 46.5 in July.

Leuthold Group’s chief investment strategist Jim Paulsen told CNBC last week that he expects a breakout for stocks by year’s end as the economy improves.

He said that with “all of the policy stimulus we’ve introduced...I think it’s going to start to improve economic reports”.

“If we find out it turns out better than feared, many, many portfolios are under allocated to risk assets and will have to re-adjust themselves trying to get more risk which could drive risk assets a lot higher,” he said.