Monday, 2 August 2021

Economy could “sputter” as COVID-19 surges

The S&P 500 rose 2.3 percent in July, its sixth consecutive positive month.

However, Rosenberg Research president David Rosenberg warned on Friday that surging COVID-19 Delta variant cases paired with the culmination of fiscal stimulus pose risks to the stock market.

“We have to be prepared here for the economy to sputter in the next several months,” said Rosenberg.

Indeed, health experts and officials expect the surge in COVID-19 cases to worsen as long as large segments of the country remain unvaccinated.

“We will see this big, steep acceleration,” said Dr Peter Hotez, co-director for the Center for Vaccine Development at Texas Children's Hospital.

The hit to the US economy may not be too great though if lockdowns do not return.

“I don’t think we’re going to see lockdowns,” said Dr Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases. “I think we have enough of the percentage of people in the country - not enough to crush the outbreak - but I believe enough to not allow us to get into the situation we were in last winter.”

Saturday, 31 July 2021

Markets fall, eurozone economy rebounds

Markets fell on Friday.

The S&P 500 fell 0.5 percent, the STOXX Europe 600 fell 0.5 percent and the Nikkei 225 plunged 1.8 percent.

A preliminary estiimate of eurozone GDP growth on Friday showed that the group grew 2 percent in the second quarter, rebounding from contractions in the prior two quarters.

Claus Vistesen, chief Europe economist at Pantheon Macro, said in a note this week that “the third quarter will be even better, as momentum carries over uninterrupted” but added that “new virus cases are now shooting higher — driven by the Delta variant — and evidence from the U.K. suggests that it is holding back economic activity”.

COVID-19 is also a concern in the US, where Brian Belski, chief investment strategist at BMO, suggested that increased concerns over the delta variant and “its potential implications for reopening momentum” seemed to have played a “key role” in market action.

Indeed, it should now be clear to the Centers for Disease Control and Prevention that vaccination alone cannot prevent the spread of the variant after a study of a sample of cases from Massachusetts showed that 74 percent of them were already fully vaccinated while four out of five hospitalisations occurred among the fully vaccinated.

Friday, 30 July 2021

Markets rise, not too concerned with US growth

Markets rose on Thursday.

The S&P 500 rose 0.4 percent, the STOXX Europe 600 rose 0.5 percent and the Nikkei 225 rose 0.7 percent.

Investors shrugged off news that US second-quarter GDP accelerated 6.5 percent on an annualised basis, considerably less than the 8.4 percent Dow Jones estimate.

Craig Erlam, senior market analyst at Oanda, said that the less-than-expected GDP growth “was due to a drop in inventories so nothing to be too concerned about”.

Thursday, 29 July 2021

Markets mixed, Fed “some way away” from goal

Markets were mixed on Wednesday.

The S&P 500 was flat, the STOXX Europe 600 rose 0.7 percent and the Nikkei 225 fell 1.4 percent.

The Federal Reserve kept interest rates in a target range near zero, reiterating its view that the economy continues to “strengthen” despite the spread of the Delta variant of COVID-19.

“We have some ground to cover on the labor market side,” said Fed Chairman Jerome Powell in a press conference. “I think we’re some way away from having had substantial further progress toward the maximum employment goal.”

Wednesday, 28 July 2021

Markets fall, CDC reverses mask recommendation for vaccinated people

Markets fell on Tuesday.

The S&P 500 fell 0.5 percent, snapping a five-day winning streak. The STOXX Europe 600 also fell 0.5 percent.

“Market volatility is on the rise, as worries about new virus strains have been exacerbated by stretched positioning and light summer trading,” Jean Boivin, head of BlackRock Investment Institute, said in a note.

Indeed, the Delta variant of the COVID-19 virus has forced the Centers for Disease Control and Prevention to acknolwedge what had already been known elsewhere: that vaccination alone is not enough to halt the spread of the disease.

“In recent days I have seen new scientific data from recent outbreak investigations showing that the Delta variant behaves uniquely differently from past strains of the virus that cause Covid-19,” said CDC Director Dr Rochelle Walensky on Tuesday.

“In areas with substantial and high transmission, CDC recommends fully vaccinated people wear masks in public, indoor settings, to help prevent the spread of the Delta variant and protect others -- this includes schools.”

Tuesday, 27 July 2021

US stocks rise but face “most formidable version” of COVID-19

Markets were mixed on Monday.

The S&P 500 rose 0.2 percent to a record high but the STOXX Europe 600 dipped 0.1 percent.

Asian stocks were also mostly lower. The Shanghai Composite tumbled 2.3 percent and the Hang Seng plunged 4.1 percent but the Nikkei 225 rose 1.0 percent on its return to trading.

Craig Johnson, chief market technician at Piper Sandler, said that US stocks “remain resilient” as an “impressive start to earnings season has kept the buy the dip sentiment alive”.

Indeed, investors shrugged off a report showing that new home sales in the US unexpectedly fell 6.6 percent in June.

In the meantime, David Kostin, Goldman Sachs’ head of US equity strategy, said that rising infections from the Delta variant of the COVID-19 virus “should not pose a major market risk”.

That remains to be seen, though, as many are considering the re-imposition of mask requirements, social distancing and other measures as vaccinations are proving to be less effective in stemming the disease than previously hoped.

Reuters reports that in Singapore, where Delta is the most common variant, three quarters of COVID-19 cases occurred among vaccinated individuals while in Israel, 60 percent of hospitalised cases are in vaccinated people.

“The last thing you want is to loosen restrictions when you're confronting the most formidable version of the virus yet,” said Eric Topol, director of the Scripps Research Translational Institute in La Jolla, California.

Monday, 26 July 2021

S&P 500 at new high while COVID-19 spirals "out of control"

The S&P 500 rose 2 percent last week to end at a new all-time high.

The resurgence of COVID-19 in the US has not put investors off stocks, but whether that continues remains to be seen.

On Sunday, Dr Jerome Adams, the former surgeon general during the Trump administration, told CBS News that the pandemic is "spiraling out of control" again.

"More mitigation is coming, whether it's masking or whether it's closures or whether it's your kids having to return to virtual learning, that is coming," said Adams.

Saturday, 24 July 2021

Markets mixed, COVID-19 resurgence threatens economy

Markets were mixed on Friday.

The S&P 500 rose 1.0 percent and the STOXX Europe 600 jumped 1.1 percent. However, the Shanghai Composite fell 0.7 percent.

Strong earnings reports, especially from technology stocks, helped boost sentiment in the US, and the economy is expected to acccelerate to a 9.2 percent growth rate in the second quarter.

However, the resurgence of COVID-19 in the US and around the world may dampen economic growth.

“Export platforms like Vietnam are being locked down now,” said Joseph Brusuelas, chief economist at consulting firm RSM. That could hurt global supply chains.

The US reported an average of about 43,700 new cases per day over the past week, up 65 percent over the previous seven days and nearly three times as high as the level two weeks ago.

And while much hope for containing the pandemic has been pinned on vaccination, Israel, where the Delta variant is the dominant strain, has reported that Pfizer and BioNTech’s COVID-19 vaccine is just 39 percent effective.

Friday, 23 July 2021

Markets rise amid “pretty positive backdrop”

Markets rose on Thursday.

The S&P 500 rose 0.2 percent, the STOXX Europe 600 rose 0.6 percent and the Shanghai Composite rose 0.3 percent.

Investors shrugged off news that US jobless claims unexpectedly rose to 419,000 last week.

“This economy is still in an incredibly strong rebound, corporate revenue and profits are increasing sharply, and it’s a pretty positive backdrop,” said Ron Temple, head of US equities and co-head of multi-asset investing at Lazard Asset Management.

Investors were encouraged by the European Central Bank's announcement on Thursday after its monetary policy meeting that it would maintain a “persistently accommodative” stance until it meets its target of inflation stabilising at two percent over the medium term.

COVID-19 remains a threat, with the seven-day average of new cases in the US up about 53 percent from last week, hospitalisations up 32 percent and deaths up 19 percent.

The director of the Centers for Disease Control and Prevention, Dr Rochelle Walensky, said on Thursday that the Delta variant “is one of the most infectious respiratory viruses we know of”.

Still, there is also hopeful news on the pandemic front, with former FDA chief Dr Scott Gottlieb saying on Thursday that the US will see “a peak sometime probably around late August, early September” and that “this may be over sooner than we think”.

Thursday, 22 July 2021

Markets rise, investors “conditioned to buy the dip”

Markets rose on Wednesday.

The S&P 500 rose 0.8 percent, the STOXX Europe 600 jumped 1.6 percent and the Nikkei 225 rose 0.6 percent.

Investors shrugged off the continuing rise in COVID-19 cases even as local US officials are asking Americans to once again wear masks indoors as the Delta variant surges in the country.

“Perhaps investors have just come to embrace the notion that the reaction function to a new wave of the virus is unlikely to be the same as the reaction function employed in the spring of 2020,” said Goldman Sachs’ Chris Hussey.

“We will get a follow-on rally as investors have been conditioned to buy the dip,” said Rich Steinberg, chief market strategist at The Colony Group.

In contrast, Matt Maley, equity strategist at Miller Tabak, said that “what we’ve seen here are the early warning shots of a correction that we’ll see probably... in late August, September, October”.

Wednesday, 21 July 2021

Markets rebound, economy to “fully recover”

Markets rose on Tuesday.

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

“We remain constructive on equities and see the latest round of growth and slowdown fears premature and overblown,” wrote Dubravko Lakos-Bujas, head of US equity strategy at JPMorgan.

While COVID-19 infections continue to rise in much of the world, with the US for example averaging about 26,000 daily cases in the last seven days, more than double the average from a month ago, many analysts do not see much impact on the economic recovery.

Chris Zaccarelli, CIO at Independent Advisor Alliance, said that it is “willing to let the sell-off run its course and buy the dip on the belief that the economy will fully recover and return to its prior growth trajectory, bringing most of the cyclical companies in the airline, travel and leisure industries along with it”.

Tuesday, 20 July 2021

Stocks fall, oil plunges

Markets fell on Monday.

The S&P 500 tumbled 1.6 percent, the STOXX Europe 600 plunged 2.3 percent and the Nikkei 225 fell 1.3 percent.

Oil prices plunged after OPEC and its allies agreed to raise output. West Texas Intermediate crude fell 7.5 percent while Brent fell 6.8 percent.

Allianz chief economic advisor Mohamed El-Erian said that markets are exhibiting “concerns about market technicals and concerns about growth”.

Morgan Stanley chief US equity strategist Mike Wilson noted: “Market breadth has been deteriorating for months and is just another confirmation of the mid-cycle transition, in our view. It usually ends with a material (10-20%) index level correction.”

Rising COVID-19 cases also remained a concern, with the US reporting nearly 26,000 new cases a day in the last seven days through Sunday, up from a seven-day average of around 11,000 cases a day a month ago.

Still, billionaire investor Bill Ackman is relatively sanguine about the surge in cases, saying on Monday: “I don’t think it’s going to change behavior to a great extent.”

“We are going to have an extremely strong economy coming in the fall,” he added.

Monday, 19 July 2021

England celebrates "Freedom Day"

England marks the end of more than a year of COVID-19 lockdown restrictions on Monday, a day that local media have dubbed "Freedom Day".

From midnight, laws in England requiring facemasks to be worn in shops and other indoor settings lapsed, as did capacity limits in bars and restaurants, and rules limiting the number of people who can socialise together.

"This is the right moment but we’ve got to do it cautiously. We’ve got to remember that this virus is sadly still out there," said UK Prime Minister Boris Johnson in a video message recorded on Sunday.

Not everybody will be heeding the advice on caution though.

"I want to dance, I want to hear live music, I want the vibe of being at a gig, of being around other people," a member of the public in London was quoted as saying.

Britain reported 48,161 new cases on Sunday and is forecast to soon have more new infections each day than it did at the height of a second wave of the virus earlier this year.

The government is hoping that the relatively high vaccination rate in the country will keep severe illness and deaths low.

Saturday, 17 July 2021

Markets fall amid “concerns over surging inflation” and rising COVID-19 infections

Markets fell on Friday.

The S&P 500 fell 0.8 percent, the STOXX Europe 600 fell 0.3 percent and the Nikkei 225 fell 1.0 percent.

A report on Friday showed that the preliminary consumer sentiment index for July from the University of Michigan came in at 80.8, down from 85.5 last month.

Andrew Hunter, senior US economist at Capital Economics, said that the report suggested “concerns over surging inflation”.

And while many companies have posted strong earnings results, JJ Kinahan, TD Ameritrade chief market strategist, said that “with earnings expectations so high in general, it takes a really big beat for a company to impress”.

Meanwhile, in Europe, the UK reported 51,870 new COVID-19 cases on Friday, the first time since mid-January that daily infections have risen above 50,000.

With the UK government remaining committed to plans to ease almost all pandemic restrictions, there is widespread fears that the country was heading for disaster.

“Policies that open up the country in the midst of a growing wave of infections are counterproductive in the most extreme,” warned William Haseltine, a US virologist and chair and president of ACCESS Health International.

Christina Pagel, director of the Clinical Operational Research Unit of London’s UCL, warned that there was potential for a new variant of COVID-19 to emerge this summer, and “any variant that becomes dominant in the UK will likely spread to the rest of the world”.

Infections in the US may also be following the same trajectory, with the seven-day average of new daily infections standing at 26,448, up 67 percent from a week ago.

Dr Scott Gottlieb, former commissioner of the Food and Drug Administration, warned that with so many people still unvaccinated and unwilling to wear masks, “this is just going to spread through the population”.

Friday, 16 July 2021

Markets fall, could “grind higher” with continued Fed stimulus

Markets mostly fell on Thursday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 fell 1 percent and the Nikkei 225 fell 1.2 percent.

However, the Shanghai Composite rose 1.0 percent. Reports on Thursday showed that China's GDP grew 7.9 percent year-on-year in the second quarter while retail sales and industrial production rose 12.1 and 8.3 percent respectively in June from a year earlier.

In the US, stocks fell despite positive data. Initial jobless claims for the week ending 10 July was 360,000, a new pandemic-era low, while second-quarter earnings results continued to beat expectations.

“A lot of news has been priced in,” suggested Liz Ann Sonders, chief investment strategist at Charles Schwab.

Still, Federal Reserve Chair Jerome Powell on Thursday told the Senate banking panel that the central bank will maintain its accommodative monetary policies unless high inflation is sustained for a longer period than is currently expected.

Jeffrey Gundlach, DoubleLine Capital chief executive, said that as long as the Fed maintains its “free money stimulus ... I think the stock market can stay at nosebleed levels as it has been and continue to grind higher”.

Thursday, 15 July 2021

Markets mixed, “economic reactivation will be very difficult”

Markets were mixed on Wednesday.

The S&P 500 rose 0.1 percent, the STOXX Europe 600 fell 0.1 percent and the Nikkei 225 fell 0.4 percent.

In his semiannual testimony before the House Committee on Financial Services on Wednesday, Federal Reserve Chairman Jerome Powell reitered his view that the central bank can wait before it starts to ease its bond purchases despite surging inflation readings.

World Health Organization officials reported in a briefing on Wednesday that COVID-19 infections are rapidly rising again in the US and Latin America.

“Health and well-being must be prerequisites for reactivating the economy in the context of COVID-19 because if the pandemic is not brought under control, economic reactivation will be very difficult,” said Dr Carissa Etienne, director of the Pan American Health Organization, the WHO’s regional bureau for the Americas.

Wednesday, 14 July 2021

US inflation, COVID-19 cases jump

Markets were mixed on Tuesday.

The S&P 500 fell 0.4 percent, the STOXX Europe 600 was flat and the Nikkei 225 rose 0.5 percent.

US stocks were weighed down by a report showing that the consumer price index increased 5.4 percent in June from a year earlier, the largest jump since August 2008.

“What this really shows is inflation pressures remain more acute than appreciated and are going to be with us for a longer period,” said Sarah House, senior economist for Wells Fargo’s corporate and investment bank.

In contrast, Cliff Hodge, chief investment officer at Cornerstone Wealth, said: “Moving forward we expect these inflation numbers to begin to cool.”

In Europe, concerns over the fast-spreading Delta variant of COVID-19 weighed on sentiment after France, the Netherlands, Greece and Spain announced new restrictions on Monday.

In the meantime, infections in the US are once again on the rise as the Delta variant takes hold as the dominant strain, with the seven-day average of newly confirmed cases having climbed to about 23,300 a day, almost double the average from a week ago.

“Unfortunately that’s also been accompanied by some increases in the number hospitalized, as well as emergency department evaluations, for people who are ultimately confirmed to have Covid-19,” said Dr Jay Butler, deputy director for infectious diseases at the Centers for Disease Control and Prevention.

Tuesday, 13 July 2021

US, European stocks hits record highs

Markets rose on Monday.

The S&P 500 rose 0.4 percent to a record high and the STOXX Europe 600 rose 0.7 percent to also hit a record high.

“Most investors are expecting blockbuster earnings results and these will likely be peak earnings results,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors.

“Continued earnings momentum should refuel investors’ confidence in the recovery amid slowdown concerns and drive a rotation back into Value,” said Bank of America’s Savita Subramanian in a note on Sunday.

Investors mostly shrugged off the continuing COVID-19 pandemic.

“The delta variant is ripping around the world at a scorching pace, driving a new spike in cases and death,” World Health Organization Director-General Tedros Adhanom Ghebreyesus said.

However, Dr Soumya Swaminathan, the WHO’s chief scientist, said that among vaccinated populations, the majority of cases “are mild or asymptomatic infections”.

Saturday, 10 July 2021

S&P 500 hits record high amid “strong growth backdrop”

Markets mostly rose on Friday.

The S&P 500 rose 1.1 percent to a record high and the STOXX Europe 600 rose 1.3 percent. However, the Nikkei 225 fell 0.6 percent.

Tom Lee, Fundstrat’s head of research, said in a note that the “growth scare” may have peaked on Thursday and that “equities might be shifting toward a broader risk on”.

Mike Wilson, Morgan Stanley’s chief US equity strategist, told clients that “a correction will create buying opportunities given a still strong growth backdrop”.

Friday, 9 July 2021

Markets fall as COVID-19 cases rise

Markets fell on Thursday.

The S&P 500 fell 0.9 percent and the STOXX Europe 600 plunged 1.7 percent.

“Increased Covid cases, particularly delta variants, have caused concerns that the economic acceleration will slow,” said Timothy Lesko of Granite Investment Advisors. “With markets at all-time highs and some valuations stretched there is little room for economic slowdown in this market.”

Indeed, with the highly transmissible delta variant now the dominant COVID-19 strain in the US, scientists and other health experts have warned that indoor mask mandates and other public health measures will likely make a return in the country this fall.

“We are heading for a very dangerous fall, with large swaths of the country still unvaccinated, a surging delta variant and people taking off their masks,” said Lawrence Gostin, director of the World Health Organization’s Collaborating Center on National and Global Health Law.

Thursday, 8 July 2021

S&P 500 hits record high, COVID-19 cases rising again

The S&P 500 rose 0.3 percent to a record high on Wednesday.

“Traders will be watching as the S&P 500 tech index moves closer to its relative price high established last September,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “A break above that level would certainly reinforce a sustained leadership cycle for tech.”

Meanwhile, though, the threat from COVID-19 lingers, with the US government deploying a COVID-19 surge team to provide public health support in southwest Missouri, where the spread of the virus is filling up hospital beds once again.

“We're already starting to see places with low vaccination rates starting to have relatively big spikes from the Delta variant,” said Dr Ashish Jha, dean of the Brown University School of Public Health.

Indeed, even in the UK, where 64.6 percent of the population are reportedly fully vaccinated but infections are nevertheless rising again, some scientists have condemned the government's reopening plans as “dangerous and unethical”.

Wednesday, 7 July 2021

Stocks mixed, oil hits highest level in 6 years

US stocks were mixed on Tuesday, with the S&P 500 down 0.2 percent but the Nasdaq Composite up 0.2 percent.

Analysts have become more cautious on stocks.

Michael Wilson, chief US equity strategist at Morgan Stanley, said in a note that “equity markets are likely to take a break this summer as things heat up”.

Sarat Sethi, portfolio manager at DCLA, warned that “we’re in a little bit of a euphoria short-term” and that “the market’s going to be very picky as to what sectors are going to do well”.

Citi analysts think that July could be “an unsettling month” due to “loftier inherent expectations” following such strong first-quarter reports.

Oil prices fluctuated sharply. It jumped to its highest level in six years after talks between OPEC and its oil-producing allies were postponed indefinitely but ended the day down.

Tuesday, 6 July 2021

Markets mixed, OPEC meeting cancelled

Markets were mixed on Monday.

The STOXX Europe 600 rose 0.3 percent and the Shanghai Composite rose 0.4 percent but the Nikkei 225 fell 0.6 percent.

The US stock market was closed for a holiday.

Oil prices rose after a meeting between oil producer group OPEC and its partners aimed at fixing crude output was called off.

Monday, 5 July 2021

Stocks expensive as economy expected to boom

The S&P 500 rose 1.7 percent last week, boosted on Friday by a report that the US economy added 850,000 jobs in June.

The persistent rise in the stock market means that stocks are now expensive.

“Valuations are rapidly approaching historically expensive levels, and some experts are worried about how high stocks are relative to their earnings,” CNN's Paul La Monica wrote over the weekend.

La Monica noted that the cyclically adjusted price-to-earnings ratio, or CAPE, is currently hovering around 38.

“That's well above levels of about 27 from late 2007 right before the global financial crisis and it's also significantly higher than the CAPE ratio of around 33 way back in September 1929 just before the historic October market crash at the onset of the Great Depression,” he wrote.

Still, some analysts remain sanguine.

“The [CAPE] ratio is less useful after a recession or a period of deep earnings growth contraction,” said Sean Darby, global head of strategy for Jefferies.

La Monica also cited Aash Shah, senior portfolio manager with Summit Global Investments, who thinks that stocks will rise with a booming economy.

Saturday, 3 July 2021

S&P 500 hits record high after “goldilocks-type” jobs report

Markets were mostly higher on Friday.

The S&P 500 rose 0.8 percent to a record high, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 rose 0.3 percent. However, the Shanghai Composite plunged 2.0 percent.

A report in the US showing a gain of 850,000 jobs last month was greeted positively by analysts.

Aberdeen Standard Investments deputy chief economist James McCann called it “a strong report”.

Angelo Kourkafas, an investment strategist at Edward Jones, said that “it was one of these goldilocks-type of reports”, suggesting that it would not trigger an earlier Federal Reserve tightening.

Friday, 2 July 2021

S&P 500 hits record high, economic growth to “stay strong”

Markets were mostly higher on Thursday.

the S&P 500 rose 0.5 percent to a record high and the STOXX Europe 600 rose 0.6 percent. However, the Nikkei 225 fell 0.3 percent.

Economic data on Thursday were mixed.

The ISM manufacturing PMI fell to 60.6 in June from 61.2 in May.

The Caixin/Markit China manufacturing PMI fell to 51.3 in June from 52.0 in May.

IHS Markit’s eurozone manufacturing PMI rose to 63.4 in June, the highest reading since the survey began in June 1997, from 63.1 in May.

Brent Schutte, chief investment strategist at Northwestern Mutual, said that he expected economic growth is “going to stay strong” and that “you still want to be invested in things where earnings growth is more cyclical in nature”.

Thursday, 1 July 2021

Markets mixed, “litany of reasons to stay constructive”

Markets were mixed on Wednesday.

The S&P 500 rose 0.1 percent to a record high, the STOXX Europe 600 fell 0.8 percent and the Nikkei 225 was flat.

With the S&P 500 rising 2 percent in June, its fifth positive month in a row, Tom Lee, managing partner and head of research at Fundstrat Global Advisors, said that investors have “a litany of reasons to stay constructive”.

Jeff Kilburg, the chief investment officer at Sanctuary Wealth, cited the Federal Reserve's continued commitment to the economic recovery as reason for optimism.

Meanwhile, the rise in the COVID-19 delta variant across the world has not dampened sentiment in most developed nations.

Dr Scott Gottlieb, the former Food and Drug Administration commissioner, told CNBC on Wednesday that the overall impact of the variant will “be substantially reduced because so many people have become vaccinated”.

Wednesday, 30 June 2021

Markets mixed, “Goldilocks for equities”

Markets were mixed on Tuesday.

The S&P 500 was little-changed, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 fell 0.8 percent.

Analysts see more gains for stocks ahead.

“The summer period, the next two months, is where I think the market continues to break out,” said JPMorgan quantitative strategist Dubravkos Lakos-Bujas.

Bank of America head of global economic research Ethan Harris said that with the bond market “lulled to sleep”, this is “Goldilocks for equities”.

Tuesday, 29 June 2021

Markets mixed, UK set to ease COVID-19 restrictions

Markets were mixed on Monday.

The S&P 500 rose 0.2 percent to a record high but the STOXX Europe 600 fell 0.6 percent while Asian stocks were little-changed.

Meanwhile, the UK is set to ease COVID-19 restrictions on 19 July.

Health secretary Sajid Javid told MPs that ministers "see no reason to go beyond" that "target date".

He said that while cases were rising, the number of deaths "remains mercifully low".

Saturday, 26 June 2021

Markets rise, US inflation jumps

Markets rose on Friday.

The S&P 500 rose 0.3 percent to a record high, the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 rose 0.7 percent.

A report in the US showed that the core personal consumption expenditures price index rose 3.4 percent in May from a year ago, the biggest increase since April 1992.

Some analysts were unperturbed by the report.

Anu Gaggar, senior global Investment analyst at Commonwealth Financial Network, said the report “provided support to the Fed’s argument that inflation is transitory” and “should continue to provide support to risk assets such as equities”.

In the meantime, COVID-19 remains a threat to the economy, with the World Health Organization on Friday urging fully vaccinated people to continue to wear masks, social distance and practice other pandemic safety measures.

Indeed, Israel, where about 55 percent of the population is fully vaccinated, on Friday reimposed mask requirement for all indoor settings except the home after COVID-19 infections more than quadrupled this week to 138 from outbreaks attributed to the Delta variant.

Friday, 25 June 2021

S&P 500 hits record high, “Fed will inevitably raise rates”

Markets were mostly higher on Thursday.

the S&P 500 rose 0.6 percent to a record high while the STOXX Europe 600 rose 0.9 percent.

However, earlier in Asia, the Nikkei 225 and Shanghai Composite finished flat.

“With the market hitting new highs this week, investors could be coming to terms with the fact that the Fed will inevitably raise rates,” said Mike Loewengart, managing director of investment strategy at E-Trade.

Thursday, 24 June 2021

US and European stocks fall amid positive economic data

Markets were mostly lower on Wednesday.

The S&P 500 dipped 0.1 percent and the STOXX Europe 600 fell 0.7 percent.

Economic data on Wednesday were mostly positive.

The IHS Markit flash US manufacturing PMI rose to a reading of 62.6 in June, the highest since the survey was expanded to cover all manufacturing industries in October 2009. IHS Markit’s flash US services sector PMI dropped to 64.8 from 70.4 in May but was still the second highest since data collection began in October 2009.

In the euro area, the IHS Markit flash composite output index hit a 180-month high of 59.2 in June. The services PMI rose to 58.0 in June from 55.2 in May while the manufacturing PMI held steady at 63.1 in June.

Craig Johnson, chief market technician at Piper Sandler, sees “some volatility curveballs, but not strikeouts for the secular bull market”.

Wednesday, 23 June 2021

Markets rise, conditions remain “precarious”

Markets rose on Tuesday.

The S&P 500 rose 0.5 percent, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 surged 3.1 percent.

Despite the latest rebound in stocks, some analysts remain wary.

“This is a precarious time — stocks have gone a relatively long period without any major sell-off, and there is heightened sensitivity to every utterance from the Fed as it attempts to transition to the start of normalization,” Invesco chief global market strategist Kristina Hooper said in a note.

Tuesday, 22 June 2021

Markets higher, summer may be “more difficult”

Markets were mostly higher on Monday.

The S&P 500 jumped 1.4 percent and the STOXX Europe 600 rose 0.7 percent.

Earlier in the day, the Nikkei 225 had plunged 3.3 percent.

“The Fed inspired sell off looks like it was overdone,” said Fiona Cincotta, senior financial markets analyst at City Index.

Still, Mike Wilson, chief US equity strategist at Morgan Stanley, said that the signal from the Federal Reserve last week “is just the moment of recognition for a tightening trend that began months ago”.

“When combined with the peak rate of change in economic and earnings revisions, it sets up a more difficult summer,” added Wilson.

Monday, 21 June 2021

Stocks at risk of significant pullback

The S&P 500 fell 1.9 percent last week.

Markets were weighed down by concerns over possible monetary policy tightening after the Federal Reserve signalled after its monetary policy meeting on Wednesday that it is likely to raise interest rates in 2022.

Moody’s Analytics chief economist Mark Zandi told CNBC on Friday that the market could see a 10 to 20 percent pullback.

“The headwinds are building for the equity market,” said Zandi. “The Federal Reserve has got to switch gears here because the economy is so strong.”

And yet, the market could also face the opposite risk: a renewed economic downturn due to a resurgence of COVID-19.

The US Centers for Disease Control and Prevention announced last week that the Delta variant of the coronavirus, also known as B.1.617.2, is a variant of concern.

The Delta variant had been declared by the World Health Organization as a variant of concern last month, and the UK had delayed further reopening of its economy after a surge in the strain.

“This is the most troubling variant by far, because it's another 60% more contagious than the Alpha, so it's a super spreader strain,” said Dr Eric Topol, the founder and director of the Scripps Research Translational Institute.

“It doubles every seven to 10 days, which means when it gets to three weeks from now, this variant will be dominant,” said Topol.

Noting that the Delta strain had already become dominant in the UK, National Institute of Allergy and Infectious Diseases Director Dr Anthony Fauci said: “We cannot let that happen in the United States.”

Saturday, 19 June 2021

Markets fall as investors get “first whiff” of tighter Fed policy

Markets fell on Friday.

The S&P 500 fell 1.3 percent, the STOXX Europe 600 tumbled 1.6 percent and the Nikkei 225 fell 0.2 percent.

The Bank of Japan on Friday announced that it would maintain its current monetary policy, adding that it “will not hesitate to take additional easing measures if necessary”.

However, most investors were more focused on the Federal Reserve’s policy after it signalled on Wednesday that it had added two rate hikes to its 2023 forecast.

“This week’s first whiff of an eventual change in Fed policy was a reminder that emergency monetary conditions and the free-money era will ultimately end,” strategists at MRB Partners wrote in a note.

Friday, 18 June 2021

Stocks mixed, commodities fall

Markets were mixed on Thursday.

The S&P 500 was little-changed while elsewhere, the STOXX Europe 600 fell 0.1 percent and the Nikkei 225 fell 0.9 percent but the Shanghai Composite rose 0.2 percent.

Commodities fell sharply on Thursday, with copper futures off by 4.8 percent while futures prices for palladium and platinum fell more than 11 percent and nearly 7 percent respectively.

“The US dollar is probably reacting to bond yields moving higher yesterday and the prospect of an earlier tapering which would slow the supply of US dollars and this has led to a sizable decline in commodity prices across the board,” said Jim Paulsen, chief investment strategist at the Leuthold Group.

An announcement by the Chinese government on Wednesday that it planned to release reserves of key metals, including copper and aluminum, also possibly contributed to the decline in commodities. This had followed warnings by government officials about speculation in financial markets in recent weeks.

Thursday, 17 June 2021

Fed rate hikes seen in 2023, tapering could come “fairly soon”

Markets were mixed on Wednesday.

The S&P 500 fell 0.5 percent and the Shanghai Composite fell 1.1 percent but the STOXX Europe 600 rose 0.2 percent to a record high.

US stocks fell after the Federal Reserve announced after its monetary policy meeting that it had raised its inflation expectations and moved up the time frame on when it will next hike interest rates to as soon as 2023.

“This is not what the market expected,” said James McCann, Aberdeen Standard Investments’ deputy chief economist.

“If you’re going to get two rate hikes in 2023, you have to start tapering fairly soon to reach that goal,” said Kathy Jones, head of fixed income at Charles Schwab.

Wednesday, 16 June 2021

Markets mixed, US producer prices jump

Markets were mixed on Tuesday.

The S&P 500 fell 0.2 percent but the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 rose 1.0 percent.

Reports in the US on Tuesday showed that the final demand index for producer prices rose 6.6 percent for the 12 months ended in May, the largest increase since 12-month data were first calculated in November 2010, while retail sales fell 1.3 percent in May.

Fiona Cincotta, senior financial markets analyst at City Index, noted that the “mixed data hasn’t raised any eyebrows in the market”, with the latter focused on the Federal Reserve's announcement on monetary policy on Wednesday.

“Taper risks plus recent high inflation data and issues around RRP/IOER rate will likely make this the last meeting the Fed can be dovish,” said George Goncalves, head of US macro strategy at MUFG.

Tuesday, 15 June 2021

Markets rise, investors on Fed watch

Markets rose on Monday.

The S&P 500 rose 0.2 percent to another record high, the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 rose 0.7 percent.

Paul Tudor Jones, founder and chief investment officer of Tudor Investment, told CNBC on Monday that the Federal Reserve's announced stance at its monetary policy meeting this week may have a major impact on markets.

Jones said that if the Fed treats the inflation numbers “with nonchalance, I think it’s just a green light to bet heavily on every inflation trade”.

“I’d probably buy commodities, buy crypto, buy gold,” added Jones.

However, Jones said that if the Fed talks about the possibility of having or getting close to its goals, “then you’re going to get a taper tantrum”.

Indeed, JPMorgan Chase appears to be betting on the latter, at least at some point in the near future.

JPMorgan CEO Jamie Dimon said at a conference on Monday that the bank has been “effectively stockpiling” cash rather than using it to buy Treasuries or other investments because of the possibility that higher inflation will force the Fed to boost interest rates.

Monday, 14 June 2021

US inflation to “roll over”

The S&P 500 rose 0.4 percent last week, its third consecutive weekly gain, to close at a record high.

Stocks have regained momentum as fears of inflation recede.

Despite a report on Thursday showing that US consumer prices rose 5 percent from a year earlier, the fastest pace in nearly 13 years, many economists agree with the Federal Reserve in thinking that the spike in inflation is transitory.

“I refuse to hyperventilate over inflation,” Rosenberg Research president David Rosenberg wrote in a note on Friday. “My forecast is slower growth, inflation peaking out and rolling over and a bull flattening in the yield curve.”

Saturday, 12 June 2021

Stocks rise, US inflation “transitory for now”

Markets mostly rose on Friday.

The S&P 500 rose 0.2 percent to a record high and the STOXX Europe 600 rose 0.7 percent. However, the Nikkei 225 was flat and the Shanghai Composite fell 0.6 percent.

Comments from analysts on the US May inflation data released on Thursday indicate that they mostly remain sanguine about the prospects of the Federal Reserve tapering its monetary stimulus.

“While the May CPI report came in above estimates, the market was not too surprised and digested the data as transitory for now,” said Craig Johnson, technical market strategist at Piper Sandler.

Charlie Ripley, senior investment strategist at Allianz Investment Management, said that the Fed “will likely need additional evidence to determine whether upward inflation pressures will be more persistent”.

Friday, 11 June 2021

S&P 500 hits record high as consumer prices jump

Markets were mostly higher on Thursday.

The S&P 500 rose 0.5 percent to a record high. The Shanghai Composite also rose 0.5 percent while the Nikkei 225 rose 0.3 percent and the STOXX Europe 600 was marginally higher.

US investors shrugged off a report showing that consumer prices jumped 5 percent from a year ago in May.

Eric Wingorad, senior economist at Alliance Bernstein, said that “the details of today’s print continue to support the idea that the spike in inflation is transitory”.

Another report released in the US on Thursday showed that jobless claims for the week ended 5 June came in at 376,000, a new pandemic era low.

In Europe, the European Central Bank left interest rates and asset purchases unchanged at its monetary policy meeting on Thursday.

Thursday, 10 June 2021

Hot inflation data coming but “Fed will keep its nerve”

Markets were mixed on Wednesday.

The S&P 500 fell 0.2 percent but the STOXX Europe 600 rose 0.1 percent and the Shanghai Composite rose 0.3 percent.

“U.S. stocks have largely been stuck in a range since mid-April and don’t seem likely to be breaking out anytime soon,” Edward Moya, senior market analyst at Oanda, said in a note.

Hot inflation data in the coming months could keep stocks weighed down, although the Federal Reserve and economists generally think the spike in inflation is likely to be transitory.

“I think inflation is the thing people want to be afraid of … I think it’s a misplaced fear,” said Ron Temple, head of US equities and co-head of multi-asset investing at Lazard Asset Management. “I think the Fed will keep its nerve.”

Wednesday, 9 June 2021

Euro area and Japanese GDP revised up

Markets were mixed on Tuesday.

The S&P 500 was flat, the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 fell 0.2 percent.

The euro area and Japan both saw upward revisions to GDP on Tuesday.

The euro area's economic contraction in the first quarter is now estimated at 0.3 percent, less than the 0.6 percent contraction estimated previously.

Japan's economy is now estimated to have contracted in the first quarter at a 3.9 percent annualised rate, down from a 5.1 percent rate previously.

In the US, a report on Tuesday showed that job openings jumped to a record high in April, which JPMorgan strategist Daniel Silver said signals “a need for firms to raise wages”.

Tuesday, 8 June 2021

Markets mixed, inflation a “time bomb”

Markets were mixed on Monday.

The S&P 500 fell 0.1 percent but the STOXX Europe 600 rose 0.2 percent and the Shanghai Composite rose 0.2 percent.

Inflation remains a concern among investors, despite the Federal Reserve having expressed the view that its rise is likely to be transitory.

Deutsche Bank economists have warned that inflation is likely to persist and lead to a crisis in the years ahead.

“It may take a year longer until 2023 but inflation will re-emerge,” said the Deutsche economists.

The economists added that “neglecting inflation leaves global economies sitting on a time bomb”.

Most other economists are more sanguine.

For example, Jan Hatzius, chief economist at Goldman Sachs, said that wage pressures and other inflationary pressures are likely to ease.

“All this suggests that Fed officials can stick with their plan to exit only very gradually from the easy current policy stance,” Hatzius wrote.

That could mean more stock market gains.

“I’m pretty optimistic about U.S. equities,” said Adam Parker, founder of Trivariate Research.

“The basics are extraordinary earnings growth, a strong economy, low interest rates,” said Ed Keon, chief investment strategist at QMA. “That makes for a bull market.”

Monday, 7 June 2021

India's COVID-19 infections at two-month low

Finally, India is seeing a downtrend in the number of COVID-19 cases.

On Sunday, India reported 114,460 new COVID-19 infections, the lowest in two months, while the death toll increased by 2,677.

New Delhi and other cities are working towards allowing more businesses to operate and movement rules to be relaxed from Monday onwards.

Elsewhere in Asia, though, cases continue to rise or stay near peaks.

In Malaysia, 6,241 new COVID-19 cases were reported on Sunday while the number of patients in the intensive care unit hit a record for the 13th consecutive day.

Even Australia, one of the more successful countries in containing the disease, saw a jump in COVID-19 cases on Monday, albeit from a low base.

In Taiwan, the government announced on Monday that it will extend COVID-19 restrictions for another two weeks until 28 June and schools will remain shut until the summer vacation.

Saturday, 5 June 2021

Markets rise, US economy adds 559,000 jobs

Markets were mostly higher on Friday.

The S&P 500 rose 0.9 percent, the STOXX Europe 600 rose 0.4 percent and the Shanghai Composite rose 0.2 percent.

A report on Friday showed that the US economy added 559,000 jobs in May, higher than the upwardly revised 278,000 gain in April. The unemployment rate fell to 5.8 percent from 6.1 percent.

John Briggs, global head of strategy at NatWest Markets, described the report as a “goldilocks for risk” as it is “not too hot to bring in the Fed and not too cold to worry about the economy”.

Friday, 4 June 2021

Markets fall but economic expansion “on the horizon”

Markets were mostly lower on Thursday.

The S&P 500 fell 0.4 percent, the STOXX Europe 600 fell 0.1 percent and the Shanghai Composite fell 0.4 percent.

ADP reported that US private employment gained 978,000 in May, the largest since June 2020.

Another report from the US showed that first-time claims for unemployment benefits totalled 385,000 for the week ended 29 May, the first time that jobless claims fell below 400,000 since the early days of the pandemic.

The Institute for Supply Management reported on Thursday that its services PMI rose to 64.0 in May, all-time high, from 62.7 in April.

Mike Loewengart, a managing director at E-Trade, said that “the economy is flashing some very real signs that this isn’t just a comeback—expansion mode could be on the horizon”.

Meanwhile, in the euro area, the final IHS Markit composite output index rose to 57.1 in May from 53.8 in April, driven by an acceleration of growth in services.

In China, though, the Caixin/Markit services PMI for May came in at 55.1, down from 56.3 in April.

Thursday, 3 June 2021

Markets rise, COVID-19 still a threat

Markets were mostly higher on Wednesday.

The S&P 500 rose 0.1 percent, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 rose 0.5 percent.

CFRA Research’s chief investment strategist Sam Stovall told CNBC on Tuesday that June is likely to be “a lackluster month” and may even set the market up for a July swoon.

Nevertheless, his S&P 500 12-month rolling target of 4,620 implies a 10 percent gain from current levels and new record highs.

However, in the meantime, COVID-19 remains a threat, the World Health Organization warned on Wednesday.

Noting that the Delta variant, previously known as the B.1.617.2, has now spread to at least 62 countries, the WHO said that “no one is out of the woods”, with even countries with high vaccination rates seeing a rise in cases over the last week or two.

Wednesday, 2 June 2021

Markets mixed, global manufacturing activity improves

Markets were mixed on Tuesday.

The STOXX Europe 600 rose 0.8 percent and the Shanghai Composite rose 0.3 percent but the Nikkei 225 fell 0.2 percent and the S&P 500 was flat.

Manufacturing purchasing managers data on Tuesday were positive.

In the US, the Institute for Supply Management's index of national factory activity rose to 61.2 in May from 60.7 in April.

In the euro zone, the IHS Markit manufacturing PMI rose to a record high of 63.1 in May from 62.9 in April.

In China, the Caixin/Markit manufacturing PMI rose to 52.0 in May from 51.9 in April.

Tuesday, 1 June 2021

Markets mostly lower, China manufacturing PMI slips

Markets were mostly lower on Monday.

The Nikkei 225 fell 1.0 percent and the DAX fell 0.7 percent. However, the Shanghai Composite rose 0.4 percent.

The US and UK markets were closed for holidays.

In economic news, China reported that its official manufacturing PMI slipped to 51.0 in May from 51.1 in April.

Monday, 31 May 2021

China announces three-child policy

Inflation has become a major concern amid the massive monetary and fiscal stimulus enacted by governments around the world in response to the COVID-19 pandemic.

Over the long term, however, demographic forces will play an important part in sustaining inflationary pressures.

Back in the 1990s and 2000s, China was a source of global deflationary pressure due to its large workforce becoming integrated into the global economy. That trend is now reversing as China's low birth rate leads to a shrinking workforce.

On Monday, China announced that each couple would be permitted to have up to three children. It had scrapped its one-child policy in 2016.

The latest move comes after a census showed early this month that China's population grew at its slowest rate during the last decade since the 1950s, with data showing a fertility rate of 1.3 children per woman for 2020.

Saturday, 29 May 2021

Markets rise, US inflation jumps

Markets were mostly higher on Friday.

The S&P 500 rose 0.1 percent, the STOXX Europe 600 rose 0.6 percent and the Nikkei 225 surged 2.1 percent.

Investors largely shrugged off a report showing that the US core personal consumption expenditures index rose 3.1 percent in April.

“Inflation pressures might get worse before they get better,” wrote Jefferies economist Aneta Markowska.

Jamie Cox, managing partner at Harris Financial Group, said that in the meantime, with real yields still low, this is “the transitory sweet spot”.

Friday, 28 May 2021

Markets higher as US jobless claims hit pandemic low

Markets were mostly higher on Thursday.

The S&P 500 rose 0.1 percent, the STOXX Europe 600 rose 0.3 percent and the Shanghai Composite rose 0.4 percent.

However, the Nikkei 225 fell 0.3 percent.

A report in the US on Thursday showed that initial jobless claims fell to 406,000 in the week ended 22 May, a new pandemic low.

“As the U.S. economy progresses with its vaccination program and reopening measures, employment and labor force participation are expected to pick up in the coming months,” said Ali Jaffari, head of North American capital markets at Validus Risk Management.

Thursday, 27 May 2021

Markets eke out gains, “keep buying the dips”

Markets mostly eked out small gains on Wednesday.

The S&P 500 rose 0.2 percent, the Nikkei 225 rose 0.3 percent and the STOXX Europe 600 was flat.

Analysts remain optimistic.

Scott Wren, senior global market strategist at Wells Fargo, said that a strong economic recovery and low interest rates “should favor most equity markets globally, and especially those markets and sectors most closely correlated with economic growth”.

CNBC’s Jim Cramer said on Tuesday that “you need to keep buying the dips”.

Wednesday, 26 May 2021

Markets mixed, “in a holding pattern”

Markets were mixed on Tuesday.

Early in the day, the Shanghai Composite surged 2.4 percent.

However, the STOXX Europe 600 ended flat and the S&P 500 dipped 0.2 percent.

Tom Essaye, founder of Sevens Report, said in a note that the market is “in a holding pattern” until there is clarity on Fed tapering.

However, Jim Paulsen, chief investment strategist at the Leuthold Group, thinks that inflation fears have eased and growth stocks are regaining leadership.

Tuesday, 25 May 2021

Markets rise, debt levels a risk for emerging economies

Markets rose on Monday.

The S&P 500 rose 1.0 percent, the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 rose 0.2 percent.

With stocks rebounding from last week's falls, JPMorgan noted that the “‘buy the dip’ mentality has been remarkably strong this year”.

Tom Lee, head of research at Fundstrat Global Advisors, certainly appears optimistic, suggesting that “when equities break out of this range, the next move is a substantial rise higher”.

However, Steve Cochrane, chief Asia-Pacific economist at Moody’s Analytics, told CNBC on Monday that swelling debt levels in emerging economies may hold back their recovery.

“The debt loads rose most in emerging markets and they may have the most difficulty in terms of taking care of this debt going forward,” he said.

Monday, 24 May 2021

Inflation pressures building “fairly sharply”

Joel Naroff, president and chief economist of Naroff Economics LLC, recently said in an interview that inflation pressures are rising.

“There is no question that inflation pressures are building, and they are building fairly sharply,” he said.

“I think we have a greater risk that this will be an extended period of inflation rather than a transitory period,” he added.

A key driver of inflation could be rising wages.

“The economy is overheating and companies, even though we have a high unemployment rate, cannot get the labor they need to meet demand and they are being forced to raise wages,” said Jonathan Golub, chief US equity strategist at Credit Suisse.

Mark Zandi, Moody’s Analytics chief economist, sees a moderation in wage increases in the coming months.

“Things will settle down probably toward the fall as the supply side of the economy catches up and people get back to work and we’re on the other side of the pandemic,” he said.

However, he sees wages becoming an issue again in 2023 or 2024.

“Wage pressures will intensify and take a bigger bite out of corporate profits,” Zandi said. “Companies will try to raise prices.”

Saturday, 22 May 2021

Markets mixed amid positive economic data

Markets were mixed on Friday.

The S&P 500 fell 0.1 percent but the STOXX Europe 600 rose 0.6 percent.

Earlier in Asia, the Shanghai Composite fell 0.6 percent but the Nikkei 225 rose 0.8 percent.

Economic data on Friday were positive.

In the US, the IHS Markit flash manufacturing PMI rose to an all-time high of 61.5 in May from 60.5 in April.

In europe, the IHS Markit flash eurozone composite PMI rose to 56.9 in May from 53.8 in April while the UK composite PMI rose to 62.0, the highest since the survey was launched in 1998, from 60.7.

Scott Ruesterholz, a portfolio manager at Insight Investment, said that “we anticipate meaningful labor market improvement in coming months” in the US.

Adam Crisafulli, founder of Vital Knowledge, said in a note that “stocks should be fine so long as the Fed doesn’t signal a taper before Nov”.

Friday, 21 May 2021

Markets rise, US economy “humming along”

Markets rose on Thursday.

The S&P 500 rose 1.1 percent, the STOXX Europe 600 rose 1.3 percent and the Nikkei 225 rose 0.2 percent.

A report in the US on Thursday showed that the number of first-time claims for unemployment benefits for the week ended 15 May came in at 444,000, the lowest since 14 March 2020.

“The jobless claims read shows once again that that we’re heading in the right direction,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial.

“The economy is doing a little bit better than people expect. It's actually humming along,” Honeywell CEO Darius Adamczyk told CNN.

However, the improvement in the economy is driving up inflation.

“We are seeing accelerating inflation, both in terms of material and labor,” said Adamczyk.

Thursday, 20 May 2021

Markets fall, Fed “really going to have to lift its policy rate”

Markets fell on Wednesday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 plunged 1.5 percent and the Nikkei 225 fell 1.3 percent.

US stocks did manage to recover most of the sharp falls suffered early in the session, when they were weighed down initially by a sudden plunge in cryptocurrencies and later by the minutes of the last Federal Reserve monetary policy meeting that said that “if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases”.

In Europe, a report from the UK showed that consumer prices rose by 1.5 percent in April, more than double the 0.7 percent rise in March.

Melanie Baker, senior economist at Royal London Asset Management, said that “as the economy reopens, it seems likely that we will see some further price increases and inflation is likely to end the year higher”.

Indeed, some economists think that fresh waves of COVID-19 cases in major manufacturing hubs in Asia could hit global supply chains and could cause inflation to rise quicker.

“I think by the end of this year, the Fed is really going to have to lift its policy rate,” said Richard Martin, managing director of IMA Asia.

Wednesday, 19 May 2021

S&P 500 falls, ″not a bull-market breaker yet”

Markets were mixed on Tuesday.

The S&P 500 fell 0.9 percent but the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 surged 2.1 percent.

Despite a second consecutive decline in the S&P 500, some analysts remain sanguine.

″Growth may be peaking, but it’s not a bull-market breaker yet,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments.

Tuesday, 18 May 2021

Markets fall amid “overbought” signs

Markets were mostly lower on Monday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 dipped 0.05 percent and the Nikkei 225 fell 0.9 percent.

Some analysts remain optimistic on stocks.

Mark Haefele, UBS’ chief investment officer, said that while inflation data could drive further bouts of volatiliy, “we don’t see inflation concerns ending the rally in stocks”.

However, other analysts are cautious.

Nikolaos Panigirtzoglou, a managing director at JPMorgan, said in a note that last week’s volatility is “also a warning sign of how overbought equity markets have become”.

“Investor and equity analyst reactions to earnings results reveal skepticism that 1Q beats provide a reason for additional forward-looking optimism,” wrote David Kostin, Goldman Sachs’ chief US equity strategist.

Monday, 17 May 2021

S&P 500 declines but outlook “constructive”

The S&P 500 fell 1.4 percent last week.

There was considerable volatility throughout the week. The S&P 500 fell 4.0 percent on the first three days, then recouped some of those losses over the last two days.

Analysts mostly remain optimistic.

“I think the fact we bounced at the end of the week is constructive,” said Art Hogan, chief market strategist at National Securities.

“The S&P 500 held the 50-day moving average, which is constructive,” said Scott Redler, chief strategist at T3Live.com. “The tech sector, which has been under pressure, held its yearly uptrend earlier in the week.”

Victoria Fernandez, chief market strategist at Crossmark Global Investments, noted that investment-grade and high-yield credit spreads were not flashing any warning signs.

“That’s saying the credit market is not concerned right now,” said Fernandez.

Saturday, 15 May 2021

Markets rise, Covid-19 variant from India a threat

Markets rose on Friday.

The S&P 500 jumped 1.5 percent, the STOXX Euroipe 600 rose 1.2 percent and the Nikkei 225 surged 2.3 percent.

“The corporate turnaround is strong enough to keep markets rising, even as bond yields increase in anticipation of central bank tightening,” Robert Buckland, equity strategist at Citi, said in a note.

Still, stocks may not be out of the woods.

“There needs to be a correction into the summer that is meaningful enough to eliminate the extreme intermediate-term overbought condition and excess optimism,” said Tony Dwyer, chief market strategist at Canaccord Genuity.

Also, even as the US and elsewhere ease COVID-19-related restrictions, the UK warned on Friday that the variant from India has the potential to derail the easing process.

England’s chief medical officer, Chris Whitty, said that there is “confidence” that the variant is “more transmissible” than the variants already circulating in the country.

UK Prime Minister Boris Johnson said that “this new variant could pose a serious disruption to our progress”.

Friday, 14 May 2021

S&P 500 rebounds, “bull market has further to run”

Markets were mixed on Thursday.

The S&P 500 jumped 1.2 percent but the STOXX Europe 600 dipped 0.1 percent and the Nikkei 225 plunged 2.5 percent.

“This bull market ultimately has further to run,” said Keith Lerner, chief market strategist at Truist.

“We do not think that yesterday’s inflation print changes the longer-term case for inflation after the reopening trade, and that is what ultimately matters for markets,” AB Bernstein strategist Inigo Fraser-Jenkins said in a note.

Indeed, investors shrugged off another high inflation report on Thursday, with producer prices in April jumping more than 6 percent from a year ago.

Thursday, 13 May 2021

S&P 500 plunges as CPI jumps

US stocks plunged on Wednesday, with the S&P 500 falling 2.1 percent.

Asian markets also fell sharply. The Taiwan Stock Exchange sank 4.1 percent and the Nikkei 225 tumbled 1.6 percent.

However, the STOXX Europe 600 rose 0.3 percent.

The US stock market was spooked by a report that showed that the consumer price index jumped 4.2 percent in April from a year ago and 0.8 percent from the previous month. Core CPI increased 3 percent from the previous year and 0.9 percent from the previous month.

“Investors who may have been looking for a reason to lighten up on a stock market that was up more than 10% year to date found a good one: rising inflation,” Chris Hussey, a managing director at Goldman Sachs, said in a note.

Wednesday, 12 May 2021

Markets fall, US labour shortages “widespread”

Markets fell on Tuesday.

The S&P 500 fell 0.9 percent, the STOXX Europe 600 tumbled 2.0 percent and the Nikkei 225 plunged 3.1 percent.

The Nasdaq Composite came off early lows though to end 0.1 percent lower.

A report on Tuesday showed that job openings in the US rose 597,000, or 8 percent, to a record high of 8.12 million, but hires rose just 215,000, or 3.7 percent, to slightly more than 6 million.

Michael Pearce, senior US economist at Capital Economics, said that the report showed that “labor shortages are widespread, pushing up prices and potentially acting as a brake on the recovery”.

Quincy Krosby, chief market strategist for Prudential Financial, said the report suggests “the need to boost wages”.

Tuesday, 11 May 2021

Nasdaq plunges, tech stocks see “aggressive selling”

Markets were mixed on Monday.

The S&P 500 fell 1.0 percent, European markets were mixed while Asian markets rose.

Tech stocks were the biggest losers on Monday, with the Nasdaq Composite plunging 2.5 percent.

Adam Crisafulli, founder of Vital Knowledge, noted that the technology sector “is seeing aggressive selling and accumulating technical damage as prices breach key levels”.

Monday, 10 May 2021

S&P 500 at record high, Fed may need to begin tapering

The S&P 500 rose 1.2 percent last week to a record high.

US stocks gained despite a disappointing US April employment report on Friday.

Some analysts attributed the rise in stocks to the expectation that the Federal Reserve will be likely to maintain easy monetary policy.

“It certainly takes the pressure off the Fed and takes an imminent rate increase off the table,” said JJ Kinahan, chief market strategist at TD Ameritrade. “We’re not going to see inflation in wages, and we don’t have as many people employed as we thought, so we have to keep the party going.”

However, other analysts think that the weaker-than-expected job growth was due to a shortage of labour supply, which would not be responsive to monetary policy.

“I think this is just as much about a shortage in labor supply as it is about a shortage of labor demand,” said Jason Furman, an economist at Harvard University and a former Obama administration advisor. “If you look at April, it appears that there were about 1.1 unemployed workers for every job opening. So there are a lot of jobs out there, there is just still not a lot of labor supply.”

That is a view shared by Mohamed El-Erian.

Indeed, when asked whether he thinks the Fed should begin tapering monetary easing despite the jobs report, El-Erian replied: “I do. Because I think that this is a supply issue and not a demand issue. And I really worry about financial instability, and I worry about unanchoring inflationary expectations.”

Saturday, 8 May 2021

US jobs disappoint, stocks hit record highs

Markets rose on Friday.

The S&P 500 rose 0.7 percent to a record high, the STOXX Europe 600 rose 0.9 percent to a record high and the Nikkei 225 rose 0.1 percent.

US stocks shrugged off a disappointing April employment report, which showed 266,000 jobs created last month.

“It was a disappointing read on job creation and brings into question the assumption that Q2 is going to carry-forward the positive momentum established at the beginning of the year,” Ian Lyngen, head of US rates at BMO, said in a note.

Still, Richard Flynn, UK managing director at Charles Schwab, said that “across economic metrics -- from GDP to retail sales to job growth -- boom conditions are evident”.

Also, JJ Kinahan, chief market strategist at TD Ameritrade, said: “It certainly takes the pressure off the Fed and takes an imminent rate increase off the table.”

Friday, 7 May 2021

Markets mixed, “vulnerable to significant declines”

Markets were mixed on Thursday.

The S&P 500 rose 0.8 percent and the Nikkei 225 surged 1.8 percent. However, the STOXX Europe 600 fell 0.1 percent.

US stocks rose after a better-than-expected reading on jobless claims. First-time claims for unemployment insurance totalled 498,000 for the week ended 1 May, a pandemic-era low.

“Today’s read is another proof point that we’re one step closer to full economic recovery, sooner than some may have expected,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial.

“Given that we expect the economy to grow well above trend this year and next, value stands to benefit,” said Keith Lerner, chief market strategist at Truist.

However, a Federal Reserve report released on Thursday warned that rising asset prices in the stock market and elsewhere pose increasing threats to the financial system.

The report said that “valuations for some assets are elevated relative to historical norms even when using measures that account for Treasury yields” and thus “asset prices may be vulnerable to significant declines should risk appetite fall”.

In an accompanying statement, Fed Governor Lael Brainard said: “The combination of stretched valuations with very high levels of corporate indebtedness bear watching because of the potential to amplify the effects of a re-pricing event.”

Thursday, 6 May 2021

Markets rise, US consumers neutral on stocks

Markets were mostly higher on Wednesday.

The S&P 500 rose 0.1 percent and the STOXX Europe 600 surged 1.8 percent.

Economic data on Wednesday were mostly positive.

In the US, private payrolls rose by 742,000 jobs in April according to ADP, the IHS Markit US services PMI came in at 64.7 for April while the ISM non-manufacturing index came in at 62.7.

In the euro area, the IHS Markit final composite PMI for April came in at 53.8, up from 53.2 in March.

Despite the rally in stocks and the recovery in the economy, US consumers are still skeptical about stocks.

According to a survey by the Conference Board, expectations for a decrease in stock prices over the next 12 months has fallen to a neutral level after being elevated amid the COVID-19 pandemic, far away from reaching excessive levels that would trigger a contrarian sell signal.

Wednesday, 5 May 2021

Tech stocks lead market falls

Markets were mostly lower on Tuesday.

The S&P 500 fell 0.7 percent and the STOXX Europe 600 fell 1.4 percent.

Technology stocks saw the biggest losses, with the Nasdaq Composite plunging 1.9 percent.

“It’s a combination of a sell-off on the winners of the past months... with the month of May and a ‘nervous’ positioning,” said Angelo Meda, portfolio manager at Banor SIM in Milan.

Adding to concerns for investors were comments by US Treasury Secretary Janet Yellen that interest rates may rise.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat,” Yellen said during an economic forum presented by The Atlantic.

Tuesday, 4 May 2021

Markets rise amid positive manufacturing data

Markets were mostly higher on Monday.

The S&P 500 rose 0.3 percent and the STOXX Europe 600 rose 0.6 percent.

Economic data on Monday were positive, with Markit's manufacturing PMI rising in April in both the US and the euro area to 60.5 and 62.9 respectively, the latter a record high.

However, the Institute for Supply Management's US manufacturing PMI for April came in at 60.7, down from 64.7 in March.

US stocks were also boosted by news that most capacity restrictions will be lifted across New York, New Jersey and Connecticut this month.

In Europe, analysts at BCA Research noted that COVID-19 infections are stabilising in many countries and vaccinations are gathering pace. “This will allow authorities to ease restrictions and economic activity to accelerate,” they wrote.

Monday, 3 May 2021

India COVID-19: Industry body urges "maximal response measure"

COVID-19 is continuing to take a heavy toll in India.

On Monday, the country reported 368,147 new cases, the twelfth consecutive day infections has exceeded 300,000, and 3,417 deaths from the disease.

"In my opinion, only a national stay at home order and declaring medical emergency will help to address the current healthcare needs," said Bhramar Mukherjee, an epidemiologist with the University of Michigan.

The situation in India has become so dire that even the country's industry, often the opponents of restrictions in other countries, has urged curbs to economic activity to save lives.

Uday Kotak, managing director of Kotak Mahindra Bank and president of the Confederation of Indian Industry, said a "maximal response measure at the highest level is called for to cut the transmission links", including "curtailing economic activity to reduce suffering".

Saturday, 1 May 2021

Markets fall, euro area in recession

Markets fell on Friday.

The S&P 500 fell 0.7 percent, the STOXX Europe 600 fell 0.3 percent and the Shanghai Composite fell 0.8 percent.

Economic data on Friday were mixed.

In the US, consumer spending rose a better-than-expected 4.2 percent in March.

However, in the euro area, GDP fell 0.6 percent in the first quarter, a second consecutive quarterly decline that means that the region technically fell into recession.

In China, the official manufacturing PMI fell to 51.1 in April from 51.9 in March.

“In our view, the global economy will benefit from spill‑overs via higher US imports,” wrote Kim Mundy, a senior economist and currency strategist at the Commonwealth Bank of Australia. “The combination of low interest rates, an improving US economy and an improving global economy is a recipe for the USD to continue on its downward trend.”

Friday, 30 April 2021

Markets mixed, “trend remains positive”

Markets were mixed on Thursday.

The S&P 500 rose 0.7 percent to a record high but the STOXX Europe 600 fell 0.3 percent.

Keith Lerner, chief market strategist at Truist, said that the “primary market trend remains positive” but “we expect a choppier environment”.

Other analysts have expressed similar views.

“In an environment of strong consumer demand, we expect revenue growth to help offset the drag from input costs,” said UBS Global Wealth Management Chief Investment Officer Mark Haefele.

David Marchant, CIO of Canada Life Asset Management, said that “equities will probably stay up and may continue to drift higher, but I just think you need to exercise a degree of caution, be a little more selective about where you are putting your money”.

Update: Revised on 1 May to remove an outdated Nikkei 225 performance figure.

Thursday, 29 April 2021

Markets mixed, Fed keeps easy monetary policy

Markets were mixed on Wednesday.

The S&P 500 touched an intraday record but closed 0.1 percent lower.

Elsewhere, the Nikkei 225 rose 0.2 percent while the STOXX Europe 600 ended little-changed.

The Federal Reserve kept its easy monetary policy in place on Wednesday despite an economy that it acknowledged is accelerating.

However, US stocks failed to maintain initial gains from the decision after Fed Chairman Jerome Powell said at a news conference after its monetary policy meeting that equity markets are showing signs of “froth”.