Thursday, 17 October 2019

US stocks fall amid falling retail sales and overvaluation

Markets were mixed on Wednesday.

The S&P 500 fell 0.2 percent and the STOXX Europe 600 dipped 0.1 percent.

Earlier in Asia, the Shanghai Composite fell 0.4 percent but the Nikkei 225 jumped 1.2 percent.

A report showing a 0.3 percent fall in US retail sales in September raised concerns of a slowdown in consumer spending.

The report pushed the probability of an October interest rate cut by the Federal Reserve up to 90.3 percent from 73.8 percent on Tuesday, based on CME Group data.

Interest rate cuts may be all that is keeping some markets up, according to the International Monetary Fund.

“Equity markets appear to be overvalued in Japan and the United States,” the IMF said in its latest Global Financial Stability report released on Wednesday.

“Declines in interest rates have further motivated investors to search for yield by increasing duration and credit exposures, a development that has boosted asset valuations,” it suggested.

It warned that the search for yield is also “creating an environment conducive to a buildup of vulnerabilities”.

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