Markets mixed but “bullish case does remain”

Markets were mixed on Monday.

The S&P 500 reversed early losses to close 0.4 percent higher but earlier, the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 plunged 1.9 percent.

Investors in the US shrugged off continuing tension in the Middle East, with Sahak Manuelian, managing director of equity trading at Wedbush Securities, suggesting that investors are “really focusing on stock fundamentals”.

Also, Kristina Hooper, chief global market strategist at Invesco, said that the Federal Reserve is likely to continue to provide monetary policy support.

“The fact that the Fed is being very accommodative, in maintaining three insurance rate cuts, even though it looks like we are going to get a ‘phase one’ trade deal [with China] soon, suggests a very accommodative monetary policy in 2020,” she said.

Indeed, Lance Roberts at Real Investment Advice wrote recently: “The bullish case does remain as both fiscal and monetary stimulus remains excessively abundant.”

“This is why, despite excessive technical deviations, extraordinary complacency, and extreme bullishness, we remain allocated toward equity risk in portfolios currently,” he added.