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”.

Wednesday, 28 April 2021

Markets lower, “stocks still have more upside”

Markets were mostly lower on Tuesday.

The S&P 500 fell less than 0.1 percent, the STOXX Europe 600 fell 0.1 percent and the Nikkei 225 fell 0.5 percent.

US economic data on Tuesday were positive.

Home prices in February rose 12 percent year-over-year, the biggest gain in 15 years, according to the S&P CoreLogic Case-Shiller home price index.

The Conference Board’s consumer confidence index jumped to 121.7, the highest since February 2020.

US corporate earnings reports have also been positive. With about a third of the S&P 500 having reported numbers so far, 84 percent of companies have turned in a positive earnings surprise, according to FactSet.

Jeff Kilburg, chief investment officer at Sanctuary Wealth, said that “we are going to see the FANG stocks deliver and I think that’s the catalyst to continue the trajectory of the S&P 500 to new all-time highs”.

“Strong breadth measures suggest stocks still may have more upside,” said Jeff Buchbinder, equity strategist at LPL Financial.

Tuesday, 27 April 2021

S&P 500, Indian COVID-19 cases hit record highs

Markets were mostly higher on Monday.

The S&P 500 rose 0.2 percent to a record high, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 rose 0.4 percent.

“Growth is still improving and liquidity is still abundant,” said Andrew Sheets, chief cross-asset strategist at Morgan Stanley. “The bull market remains intact [but] a harder, choppier, more range-bound summer does seem likely.”

“Despite the strong earnings reports we’ve seen thus far, the market is really taking beats in stride amid already high valuations,” said Chris Larkin, managing director of trading and investing product at E-Trade.

On the COVID-19 front, the US picture is looking brighter as officials have started talking about reaching the “finish line”.

However, in India, it is panic stations as the country reported a record 352,991 new coronavirus infections on Monday and overcrowded hospitals in Delhi and elsewhere turn away patients after running out of supplies of medical oxygen and beds.

“Currently the hospital is in beg-and-borrow mode and it is an extreme crisis situation,” said a spokesman of the Sir Ganga Ram Hospital in the capital.

Monday, 26 April 2021

Yields could rise with debt near “dangerous” levels

The S&P 500 dipped 0.1 percent last week.

A Federal Reserve monetary policy meeting this week is unlikely to move the market significantly as it is widely expected that the central bank will not signal a change to its policy stance.

“The economic outlook is fairly good, as long the Fed keeps its foot on the pedal,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “The market has finally accepted that they will.”

However, Michael Schumacher, Wells Fargo Securities’ head of macro strategy, thinks that the Fed’s high level of comfort with rising inflation, the massive amount of fiscal and monetary stimulus in the pipeline and the economic data’s strength, could drive Treasury yields back up.

“It’s a recipe for yields to go up and perhaps pretty significantly,” he told CNBC on Friday.

Apart from potentially impacting markets, a rise in bond yields could spell trouble for some countries that are already knee-deep in debt.

A paper by Marcos Chamon and Jonathan D Ostry at the International Monetary Fund warned that debt in some countries “is getting closer to levels that were previously considered dangerous”.

“For some countries, the remaining fiscal space would not allow a response of a size comparable to what was deployed following the Global Financial Crisis or COVID-19—potentially constraining action in the event of another major shock,” they wrote.

Saturday, 24 April 2021

S&P 500 jumps, tax hike likely to be “scaled back”

Markets were mixed on Friday, with the S&P 500 the outperformer among major markets, rising 1.1 percent.

US President Joe Biden's reported proposal to raise capital gains taxes for the rich remained a talking point in the market, with more analysts now saying that the impact on the market may not be that great.

“We expect Congress will pass a scaled back version of this tax increase,” wrote Goldman Sachs economists in a note.

“We would expect opportunistic investors who are unaffected by this proposal to step in and take advantage of lower prices,” UBS strategists said.

Friday, 23 April 2021

Markets mixed, US taxes may be “going higher”

Markets were mixed on Thursday.

The S&P 500 fell 0.9 percent but the STOXX Europe 600 rose 0.7 percent and the Nikkei 225 surged 2.4 percent.

US stocks came under pressure after a report said that President Joe Biden is slated to propose much higher capital gains taxes for the rich.

“Expect selling this year if investors sense the proposal has a chance of becoming law next year,” said Jack Ablin, Cresset Capital Management’s founding partner and CIO.

Doug Sandler, head of global strategy at RiverFront Investment Group, said that the Democrats hold only a narrow majority in Congress, so Biden's proposal “seems too controversial to get passed, but it starts the framework that taxes are going higher”.

Elsewhere, the European Central Bank kept its monetary policy unchanged on Thursday.

Thursday, 22 April 2021

Markets rise, “economy well on its way to recovery”

Markets were mostly higher on Wednesday.

The S&P 500 rose 0.9 percent and the STOXX Europe 600 rose 0.7 percent. However, the Nikkei 2252 plunged 2.0 percent.

Analysts expressed a mix of optimism and caution.

Scott Wren, Wells Fargo’s senior global market strategist, said: “It appears the economy is now well on its way to recovery. Still, earnings guidance early in the current reporting season appears to lean more conservative than our economic projections suggest.”

“While we see further spikes in volatility ahead, we expect the market rally to continue and the rotation trade to resume,” said Mark Haefele, CIO at UBS.

Wednesday, 21 April 2021

Markets fall, COVID-19 deaths pass 3 million

Markets fell on Tuesday.

The S&P 500 fell 0.7 percent, the STOXX Europe 600 plunged 1.9 percent and the Nikkei 225 sank 2.0 percent.

The worldwide Covid-19 death toll hit 3 million on Saturday, and Michael James, managing director of equity trading at Wedbush Securities, said: “We’re not out of the woods yet when it comes to the COVID virus and getting to where global economies are reopening.”

“There’s a repricing of what the international environment is going to look like,” said Tufts University economist Brian Bethune.

Tuesday, 20 April 2021

Markets mixed after hitting “strong highs”

Markets were mixed on Monday.

The S&P 500 fell 0.5 percent, the STOXX Europe 600 was little changed and the Shanghai Composite jumped 1.5 percent.

“The markets are at strong highs at the moment, and given that it is also a quiet day data-wise, it is not a surprise to see the markets drifting lower,” said Connor Campbell, an analyst at Spreadex.

“We remain bullish on equity markets overall, and see continued strength in cyclical sectors that will benefit from a broad-based economic recovery that is underway,” said James Ragan, director of wealth management research at DA Davidson.

Monday, 19 April 2021

US stocks could surge 8% by July

The S&P 500 rose 1.4 percent last week, its fourth consecutive positive week, to end at a record high.

Phil Orlando, chief equity market strategist at Federated Hermes, told CNBC on Friday that stocks could surge another 8 percent by July.

“First quarter earnings are coming in very strong. Looks like we could be up 30% year over year. The earnings recession is over,” said Orlando.

“In the second quarter, which will enjoy the full benefit of some of this fiscal stimulus, we could be looking at an earnings growth rate twice that on a year over year basis,” he added.

However, Orlando was concerned that inflation could pick up pace in the latter half of the year, which might cause the Federal Reserve to adjust its easy monetary policy.

“Right now we’re just going to have to watch and wait and make our best judgment later in the year,” he said.

There is a problem with waiting for clarity, though: many investors may reach the same conclusion at the same time.

This was highlighted by John Hussman, president of Hussman Investment Trust, in a commentary last week.

“My impression is that the next material market decline may take the form of a 25-35% air-pocket, driven by nothing more than the sudden concerted effort of overextended investors to sell, and the need for a large price adjustment in order to induce scarce buyers to take the other side,” he wrote. “Such a decline would not require a recession.”

Saturday, 17 April 2021

Markets rise, US economy “ready to rip”

Markets rose on Friday.

The S&P 500 rose 0.4 percent to a record high, the STOXX Europe 600 rose 0.9 percent and the Shanghai Composite rose 0.8 percent.

Economic data on Friday showed that economies are recovering.

China reported that its gross domestic product surged 18.3 percent in the first three months of the year from a year ago.

The University of Michigan reported that its preliminary US consumer sentiment index rose to a one-year high of 86.5 in April from 84.9 in March.

Federal Reserve Governor Christopher Waller said the US economy “is ready to rip”.

Friday, 16 April 2021

US and European stocks hit record highs

Markets were mostly higher on Thursday.

The S&P 500 rose 1.1 percent to a record high while the STOXX Europe 600 rose 0.5 percent to also close at a record high. However, the Shanghai Composite fell 0.5 percent.

US economic data on Thursday helped boost stocks as retail sales surged 9.8 percent in March while first-time claims for unemployment insurance fell to 576,000 for the week ended 10 April, the lowest level since March 2020.

“The speed and resiliency of this economic recovery is unlike anything we’ve ever seen and it helps to justify stocks at all-time highs,” said Ryan Detrick, chief market strategist at LPL Financial.

“I am incredibly bullish on the markets,” said Larry Fink, CEO of BlackRock.

Meanwhile, Chantico Global founder and CEO Gina Sanchez told CNBC on Thursday that there is opportunity in European stocks.

Sanchez said that European stocks are “very, very attractively priced” and that growth expectations are “very strong”.

Thursday, 15 April 2021

Markets mixed, “path of least resistance is higher”

Markets were mixed on Wednesday.

The S&P 500 fell 0.4 percent and the Nikkei 225 fell 0.4 percent.

However, the STOXX Europe 600 rose 0.2 percent and the Shanghai Composite rose 0.6 percent.

Despite the decline in US stocks, some analysts remain upbeat.

“The path of least resistance for stocks continues to seem to be to go higher,” said JJ Kinahan, chief market strategist at TD Ameritrade.

Wednesday, 14 April 2021

Markets shrug off negative vaccine and inflation news

Markets mostly rose on Tuesday.

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.

Markets were largely able to shrug off a call by the US Food and Drug Administration to pause innoculation with the Johnson & Johnson Covid-19 vaccine after reported cases of blood clotting.

“We’re optimistic, very optimistic that we’re going to be reopened fully in the second half of this year,” said Mike Wilson, chief US equity strategist for Morgan Stanley.

Investors also shrugged off a report on Tuesday that showed that the US consumer price index rose 0.6 percent in March and 2.6 period from the same period a year ago, slightly higher than economists expected.

Tuesday, 13 April 2021

Markets lower, COVID-19 cases “growing exponentially”

Markets were mostly lower on Monday.

The S&P 500 dipped less than 1 point to 4,127.99, the STOXX Europe 600 fell 0.5 percent and the Shanghai Composite fell 1.1 percent.

While most economies are expected to recover in the coming months, the threat from COVID-19 remains great.

The World Health Organization said on Monday that the coronavirus pandemic is now “growing exponentially”, with more than 4.4 million new Covid-19 cases reported over the last week.

Monday, 12 April 2021

Money flows push stocks higher

The S&P 500 rose 2.7 percent last week, ending the week at a record high.

The rally in stocks has been maintained amid large inflows into equity funds. According to data from BofA, equity funds have attracted more than half a trillion dollars in the past five months, exceeding inflows recorded over the previous 12 years.

“Sentiment is in very worrisome territory as is valuation, yet money flows continue to push indices higher,” said Tobias Levkovich, Citi’s chief US equity strategist.

Analysts mostly remain bullish, although some are becoming cautious.

“We remain optimistic but there’s less upside left in our view,” said Emmanuel Cau, head of European equity strategy at Barclays.

“We are risk-on, but we haven’t put our foot down on the accelerator because of valuations in some parts of the market,” said Fahad Kamal, chief investment officer at Kleinwort Hambros.

Saturday, 10 April 2021

S&P 500 hits another record high, “irrational exuberance is building”

Markets were mostly higher on Friday.

The S&P 500 rose 0.8 percent to a record high, the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 rose 0.2 percent.

US producer prices rose 1.0 percent in March and 4.2 percent from the previous year, the largest annual gain in nine years.

“Inflation in the pipeline keeps heating up,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Larry Adam, chief investment officer at Raymond James, suggested that “rising interest rates, healthy levels of inflation, and an eventual Fed rate hike are not necessarily market negatives”, noting that stocks often perform well under such conditions as long as economic growth remains robust.

Still, Chris Beauchamp, chief market analyst at IG, said that “with equity inflows continuing to hit new multi-year highs the sense of ‘irrational exuberance’ is building once again”.

Friday, 9 April 2021

Siegel: Bull market is on for 2021

Markets were mostly higher on Thursday.

The S&P 500 rose 0.4 percent to a record high and the STOXX Europe 600 rose 0.6 percent. Asian markets were mixed though, with the Nikkei 225 dipping less than 0.1 percent.

With Fed Chair Jerome Powell committing to continue buying assets for the forseeable future, Wharton School finance professor Jeremy Siegel said on CNBC that the stock market could go up 30 to 40 percent.

“I have never heard a Fed chair so dovish,” Siegel said.

“I would not really be cautious right now. I still think bull market is on for 2021,” he added.

Thursday, 8 April 2021

US stocks at record high, economy “will likely boom”

Markets were mixed on Wednesday.

The S&P 500 rose 0.1 percent to a record high and the Nikkei 225 rose 0.1 percent. However, the STOXX Europe 600 fell 0.2 percent.

The minutes of the last Federal Reserve monetary policy meeting released on Wednesday showed that officials projected that it would “be some time” before the central bank’s employment and price goals are met, so in the meantime, “asset purchases would continue at least at the current pace”.

JPMorgan Chase CEO Jamie Dimon was somewhat more ebullient in his annual letter released on Wednesday, saying that “the U.S. economy will likely boom”, and that the boom “could easily run into 2023”.

“There are lots of reasons to be excited about the months ahead, and we’re generally optimistic for this year,” said Lindsey Bell, chief investment strategist at Ally Invest.

Wednesday, 7 April 2021

Markets mixed, way out of crisis “increasingly visible”

Markets were mixed on Tuesday.

The S&P 500 dipped 0.1 percent and the Nikkei 225 fell 1.3 percent but the STOXX Europe 600 rose 0.7 percent.

Chris Hussey, a managing director at Goldman Sachs, said that “today is a time for markets to ‘consolidate’”.

However, the rally is expected to resume soon.

“Vaccinations are rolling out at a record clip, and historic stimulus efforts from Congress have all paved the way for continued positive market momentum,” said Chris Larkin, managing director of trading and investing product at E-Trade Financial.

Indeed, the International Monetary Fund is now expecting a stronger economic recovery in 2021, with the world economy now expected to grow by 6 percent in 2021, up from 5.5 percent forecast in January.

“Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible,” IMF chief economist Gita Gopinath said in the latest World Economic Outlook report.

Tuesday, 6 April 2021

S&P 500 hits record high, economic boom expected

Markets rose on Monday.

The S&P 500 rose 1.4 percent to a record high and the Nikkei 225 rose 0.8 percent.

European markets were closed for a holiday.

Following the strong US jobs report on Friday, the Institute for Supply Management reported on Monday that its non-manufacturing activity index jumped to a reading of 63.7 last month, the highest level in the survey’s history.

“A ‘Capital V’ recovery that is in the early innings,” said Tony Dwyer, Canaccord Genuity’s chief market strategist.

Indeed, with some economists expecting the US economy to boom over the next couple of months, there could be increasing pressure on the Federal Reserve to defend its super-easy monetary policy.

“They’re going to go through the gauntlet now,” said Jim Caron, head of global macro strategy at Morgan Stanley Investment Management. “The second quarter is going to be plus 10% growth and inflation is going to get to core PCE around 2.5%, and they’re going to say, ‘this is transitory.’”

“The market is pricing a lot of rate hikes,” said Michael Schumacher, director of rates at Wells Fargo. “The question then is, what does Powell do?”

“This is the market saying we’re getting ahead of the Fed,” said Peter Boockvar, chief investment strategist at Bleakley Advisory Group. “The market is going to drag the Fed into a tightening at some point.”

Monday, 5 April 2021

Tobin’s q for US stocks at twice historical average

The S&P 500 rose 1.1 percent last week, closing at a record high of 4,019.95.

With the continuing rally in US stocks, valuations are becoming more stretched.

Chris Dillow at Investors Chronicle noted last week that based on the latest figures from the Federal Reserve, the Tobin’s q, the ratio of share prices to the net worth of companies, was over 165 per cent for non-financial firms. That is twice the average since data began in 1952, and the second-highest level ever.

Dillow said that the Tobin’s q has predictive value for the stock market.

“High levels of Tobin’s q in 1969 and 2000 led to the S&P 500 falling in subsequent years and low ratios in the early 80s and in 2009 led to high returns on equities,” he wrote.

“A high q can therefore be a sign of irrational exuberance and therefore a predictor of falling prices,” he added.

Saturday, 3 April 2021

Asian markets rise, US economy “on strong path to recovery”

Asian markets rose on Friday. The Nikkei 225 surged 1.6 percent and the Shanghai Composite rose 0.5 percent.

Most markets in the US and Europe were closed for a holiday.

The US did release its March jobs report on Friday, which came in at 916,000, exceeding economists' expectations of a 675,000 gain.

Quincy Krosby, chief market strategist at Prudential Financial, said that the report “shows that the economy is healing” while Eric Merlis, head of global markets trading at Citizens, said that it was “another clear sign that the U.S. economy is on a strong path to recovery”.

Joseph Brusuelas, chief economist at RSM, suggested that “if the economy puts together a string of months like what we’ve seen in March, it will only be a matter of time before expectations on the start of Fed tapering will move up to late 2021, also pulling forward market expectations for the first interest-rate hike into the latter part of 2023”.

Friday, 2 April 2021

Markets rise, factory indices jump in US and Europe

Markets rose on Thursday.

The S&P 500 rose 1.2 percent to a record high, the STOXX Europe 600 rose 0.6 percent and the Nikkei 225 rose 0.7 percent.

Economic data on Thursday were mostly positive.

The Institute for Supply Management's index of US manufacturing activity jumped to 64.7 last month, the highest since December 1983, from 60.8 in February.

Euro zone manufacturing activity grew at its fastest pace on record in March, with IHS Markit’s final manufacturing PMI coming in at 62.5 compared to February’s 57.9.

In China, though, the Caixin/Markit manufacturing PMI for March came in at 50.6, slightly down from February’s reading of 50.9.

Thursday, 1 April 2021

Markets mixed, higher interest rates a threat to stocks

Markets were mixed on Wednesday.

The S&P 500 rose 0.4 percent but the STOXX Europe 600 fell 0.2 percent and the Nikkei 225 fell 0.9 percent.

Economic data released on Wednesday were largely positive.

In the US, private payrolls expanded by 517,000 in March, the fastest pace since September 2020.

In China, the official manufacturing PMI came in at 51.9 in March, up from February’s reading of 50.6.

In Germany, the total number of jobless people declined by 8,000 to 2.745 million in seasonally-adjusted terms.

However, positive economic data raise the probability of higher interest rates, which investors see as the biggest threat to stocks.

Wednesday, 31 March 2021

Markets mixed, US consumer confidence surges

Markets were mixed on Tuesday.

The S&P 500 fell 0.3 percent but the STOXX Europe 600 rose 0.7 percent and the Nikkei 225 rose 0.2 percent.

Despite the losses in the US, analysts at Evercore ISI wrote in a note to clients that “faster growth, rising earnings growth expectations, still historically low corporate borrowing costs, and pent up consumer demand will fuel further market gains”.

Indeed, a report from the Conference Board on Tuesday showed that its consumer confidence index surged to 109.7 in March, its highest reading in a year, from 90.4 in February.

Still, the COVID-19 situation in the US remains worrisome.

Dr Rochelle Walensky, director of the Centers for Disease Control and Prevention, spoke on Monday of a “recurring feeling...of impending doom”, noting “a steady rise of cases” over the past week or so.

Tuesday, 30 March 2021

Markets mixed as Archegos fallout weighs

Markets were mixed on Monday.

The S&P 500 dipped 0.1 percent but the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 rose 0.7 percent.

Nomura and Credit Suisse plunged after warning of major losses from lending to Archegos for equity derivatives trades. Archegos had been unable to meet banks’ calls for more collateral to secure equity swap trades they had partly financed, sparking a fire sale of stocks.

“This is the kind of thing that happens in a speculative environment. You start finding that things go wrong,” said Richard Bernstein, chief executive of Richard Bernstein Advisors.

However, other analysts remained sanguine over the risk to the overall market.

“While other funds may be caught in the mess, we fail to see how this specific car crash of a trade ends up propagating across the financial system via counterparty default,” Bespoke said.

Saturday, 27 March 2021

S&P 500 hits record high, inflation softer than expected

Markets rose on Friday.

The S&P 500 surged 1.7 percent to a record high, the STOXX Europe 600 rose 0.9 percent and the Nikkei 225 jumped 1.6 percent.

US inflation concerns abated somewhat after a report showed that the core personal consumption expenditure price index rose 0.1 percent in February and 1.4 percent from the previous year.

“Softer-than-expected PCE deflator data support the idea that Treasury yields will likely consolidate over the short-term,” said Edward Moya, senior market analyst at Oanda.

A University of Michigan survey released Friday showed the final reading of the index of consumer sentiment was 84.9 in March, up from 76.8 in February.

Oil prices rose more than 4 percent on Friday amid concerns that the attempt to dislodge a giant container ship blocking the Suez Canal may take weeks.

Friday, 26 March 2021

Markets mixed, Powell mentions “pulling back support”

Markets were mixed on Thursday.

The S&P 500 rose 0.5 percent but the STOXX Europe 600 fell 0.1 percent.

Earlier in Asia, the Nikkei 225 rose 1.1 percent but the Shanghai Composite fell 0.1 percent.

First-time claims for unemployment insurance in the US totalled 684,000 for the week ended 20 March, lower than economists' expectations.

However, with Federal Reserve Chairman Jerome Powell telling NPR that “when the economy has all but fully recovered, we will be pulling back the support that we provided during emergency times”, Mike Loewengart, managing director of investment strategy at E-Trade, warned that “if we continue to see the labor market make strides, this could translate into pressure on equities and on the Fed to reassess its accommodative stance”.

Thursday, 25 March 2021

Markets mostly lower, bull case remains “persuasive”

Markets were mostly lower on Wednesday.

The STOXX Europe 600 was flat while the S&P 500 gave up early gains to finish 0.6 percent lower.

Asian markets saw sharp falls. The Nikkei 225 and Hang Sang plunged 2.0 percent and the Shanghai Composite tumbled 1.3 percent.

Some analysts remain optimistic.

“The bull case for equities is persuasive in a recovering economy,” Oliver Brennan, head of research at TS Lombard, said in a note.

Wednesday, 24 March 2021

After one-year bull market, “upside potential more limited from here”

Markets fell on Tuesday.

The S&P 500 fell 0.8 percent, the STOXX Europe 600 fell 0.2 percent and the Shanghai Composite fell 0.9 percent.

Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen both appeared before the US House Committee on Financial Services on Tuesday and gave reassuring statements on financial markets.

Yellen said that “while asset valuations are elevated by historical metrics, there’s also belief that with vaccinations proceeding at a rapid pace, that the economy will be able to get back on track”, adding that “what’s important is for regulators to make sure that the financial sector is resilient and to make sure that markets work well”.

Powell said that the Fed would taper its asset purchases “when we’ve seen substantial further progress toward our goals” and that “we’ll communicate well in advance of the time of actually tapering”.

Meanwhile, COVID-19 remains a concern as German Chancellor Angela Merkel decided to extend a lockdown until April 18 and called on citizens to stay at home for five days over the Easter holidays.

Brad McMillan, chief investment officer at Commonwealth Financial Network, said that “the third pandemic wave left large parts of the population vulnerable both medically and economically” and the “damage will take time to heal”.

So while Tuesday marked the one-year anniversary of the pandemic bottom in the stock market, analysts are seeing further gains to be relatively muted compared to the past year.

“After an 80% rebound in equity prices since the lows of March 2020, it is fair to suggest that much of the good news is getting priced in and the upside potential becomes more limited from here,” Tobias Levkovich, chief US Equity Strategist at Citi, said in a note.

Tuesday, 23 March 2021

Markets rise, lira plunges

Markets were mostly higher on Monday.

The S&P 500 rose 0.7 percent, the STOXX Europe 600 rose 0.2 percent and the Shanghai Composite rose 1.1 percent.

However, the Nikkei 225 plunged 2.1 percent, with chipmaker Renesas Electronics sinking 4.9 percent after it announced over the weekend that it will take at least a month to restart production at a facility that was damaged by fire on Friday. That dragged down the large automakers like Toyota, Nissan and Honda, all of which fell over 3 percent.

Otherwise, markets largely shrugged off a sharp plunge in the Turkish lira. The latter followed Saturday’s dismissal of the central bank governor Naci Agbal, two days after he hiked interest rates to curb inflation.

In the US, a decline in the 10-year Treasury yield to 1.68 percent helped stocks rally.

In the meantime, Quilter Investors portfolio manager Sascha Chorley said that “this looks like the best time to add into government bonds since 2015”.

Monday, 22 March 2021

Treasury yields to retreat “temporarily”

The S&P 500 fell 0.8 percent last week, its first decline after two consecutive weeks of gains.

Stocks fell after the US 10-year Treasury yield spiked to over 1.7 percent late in the week following indications from the Federal Reserve after its monetary policy meeting last week that no interest rate hike is likely through 2023.

Nevertheless, Bianco Research president Jim Bianco told CNBC on Friday that stocks are likely to get a boost this spring because the 10-year Treasury yield will temporarily retreat.

“The near-term forecast is it’s oversold, and it’s probably due for a rally – meaning that we would have falling rates,” Bianco said.

However, for the longer term, Bianco sees yields moving higher.

“The trend towards yields is going to push-pull all year long,” Bianco said. “We could hit 2.50 [percent] over the next 12 months.”

Indeed, hedge fund billionaire Ray Dalio said on Saturday at the China Development Forum that the Fed will have to buy more bonds to help limit the rise in interest rates.

Saturday, 20 March 2021

Markets fall, “bond selloff could intensify”

Markets fell on Friday.

The S&P 500 dipped 0.1 percent, the STOXX Europe 600 fell 0.8 percent and the Nikkei 225 tumbled 1.4 percent.

A tentative decline in the US 10-year Treasury yield was halted by an announcement by the Federal Reserve that it would allow a rule change announced on 1 April 2020 to expire on March 31. That change had allowed banks to exclude Treasuries and deposits with Fed banks from the calculation of the leverage ratio.

“This is a disappointment to investors that the Fed decided not to extend it,” said Jimmy Chang, chief investment officer at Rockefeller Global Family Office.

“Wall Street is closely going to follow the upcoming Treasury auctions and if bank interest is low, the bond market selloff could intensify,” said Edward Moya, senior market analyst at Onada.

Earlier on Friday, the Bank of Japan announced that it was widening the band at which it allows long-term interest rates to move around its target, as part of a raft of measures to make its ultra-easy policy more sustainable amid a prolonged battle to fire up inflation.

Meanwhile, Europe's battle with COVID-19 continues as the continent faces a third wave of infections.

Friday, 19 March 2021

US stocks tumble as Treasury yields rise

Markets were mixed on Thursday.

In the US, the S&P 500 tumbled 1.5 percent and the Nasdaq Composite plunged 3.0 percent.

However, earlier in the day, the STOXX Europe 600 rose 0.4 percent and the Nikkei 225 rose 1.0 percent.

US stocks fell after the 10-year Treasury yield jumped 11 basis points to 1.75 percent.

“By saying that they’re willing to let inflation run hot at a time inflation concerns are rising is another way for the Fed to say that they are willing to let long-term interest rates rise further,” said Matt Maley, chief market strategist at Miller Tabak.

Thursday, 18 March 2021

US stocks hit record highs as Fed sees no rate hikes

Markets were mixed on Wednesday.

The S&P 500 rose 0.3 percent to a record high but the STOXX Europe 600 fell 0.4 percent. Asian markets were little changed.

US stocks reversed early losses after the Federal Reserve indicated that it sees no interest rate hikes through 2023.

The Fed said in a statement after its monetary policy meeting on Wednesday that “indicators of economic activity and employment have turned up recently” whille inflation “continues to run below 2 percent”.

“It sounds like the perfect scenario for investors,” said Michael Arone, chief investment strategist at State Street Global Advisors. “Monetary policy is going to remain largely accommodative almost regardless of what happens with interest rates, inflation and asset prices.”

Anu Gaggar, senior global investment analyst at Commonwealth Financial Network, said: “This is like a Goldilocks market – strong economic growth, moderately higher inflation, rebounding earnings, and very easy monetary conditions.”

Wednesday, 17 March 2021

Markets mixed, COVID-19 vaccine concern widens

Markets were mixed on Tuesday.

The S&P 500 fell 0.2 percent while the STOXX Europe 600 rose 0.9 percent and the Shanghai Composite rose 0.8 percent.

Strategists at LPL Financial said that “COVID-19 vaccines is bringing us closer to a fully reopened economy” and they “expect interest rates to fade as a threat to markets”.

The vaccination programme in Europe, however, has hit a setback, with Sweden and Latvia on Tuesday joining 11 other countries suspending the use of AstraZeneca’s COVID-19 vaccine after reports of unusual blood disorders among some recipients.

Tuesday, 16 March 2021

Markets mixed amid COVID-19 vaccine setback

Markets were mixed on Monday.

The S&P 500 rose 0.6 percent to a record high while the STOXX Europe 600 was flat and the Shanghai Composite fell 1.0 percent.

The US 10-year Treasury yield was largely steady around 1.6 percent on Monday, and that, according to Jim Paulsen, chief investment strategist at the Leuthold Group, allowed investors “to focus more on just how low yields remain overall”.

Meanwhile in Europe, the COVID-19 pandemic threat looks likely to be prolonged after Germany, France and Italy became the latest countries to suspend the use of the AstraZeneca-University of Oxford vaccine over concerns about possible side effects.

Monday, 15 March 2021

Steenbarger: S&P 500 shows very impressive breadth

The S&P 500 rose 2.6 percent last week, its second consecutive weekly gain, to a record high.

Brett Steenbarger wrote in a Forbes article that market highs have been accompanied by a high degree of investor optimism.

Steenbarger noted that the most recent survey of the American Association of Individual Investors showed that 49.4 percent of respondents were bullish, well above the historical average of 38.0 percent. 23.5 percent of investors were bearish.

While extremes in investor optimism often precede a peak in the market, Steenbarger also noted that market breadth remains strong, with more than 80 percent of stocks in the S&P 500 above their 10-day moving averages and 80 percent above their 200-day averages.

“What this means is that the great majority of shares have been strong on both a short-term and longer-term basis—very impressive breadth,” he wrote. “Going back to the start of my database in mid-2006 (over 3600 trading days), we find only 135 days with similar breadth extremes on a 10- and 200-day basis.”

“On average, it is difficult for the overall market to roll over when the great majority of individual stocks are displaying strength,” he concluded.

Saturday, 13 March 2021

Markets mixed, 10-year Treasury yield hits 1.64 percent

Markets were mixed on Friday.

In the US, the S&P 500 rose 0.1 percent to a record high but the Nasdaq Composite fell 0.6 percent.

Elsewhere, the Nikkei 225 surged 1.7 percent but the STOXX Europe 600 fell 0.3 percent.

The US 10-year Treasury yield hit 1.64 percent at its session high, its highest level since February 2020.

“Higher rates, less dovish central banks are now considered to be the single biggest threat for risk assets,” said Ralf Preusser, Bank of America’s rates strategist.

Tech stocks in particular have been particularly hit by “incredibly high valuations and yields that have tripled from the low last year,” said Robert Conzo, CEO of The Wealth Alliance.

Friday, 12 March 2021

Markets rise, ECB to increase bond purchases

Markets rose on Thursday.

The S&P 500 rose 1.0 percent to a record high, the STOXX Europe 600 rose 0.5 percent and the Shanghai Composite surged 2.4 percent.

US President Joe Biden signed a US$1.9 trillion COVID-19 relief package into law on Thursday afternoon.

“The stimulus is beating the virus at least as far as the market is concerned,” said Scott Ladner, chief investment officer at Horizon Investments. “And real rates being near negative is just historically a very strong tailwind for asset prices.”

The European Central Bank announced on Thursday that it is leaving its Pandemic Emergency Purchase Programme unchanged at a total of 1.85 trillion euros due to last until March 2022.

It also announced that it expects to increase its bond purchases “significantly” next quarter after lower than usual purchases in the first quarter.

ECB President Christine Lagarde said at a press conference that she expects “a firm rebound in economic activity in the course of 2021”.

Thursday, 11 March 2021

Markets rise as interest rate concerns ease

Markets were mostly higher on Wednesday.

The S&P 500 rose 0.6 percent and the STOXX Europe 600 rose 0.4 percent.

Earlier in the day, though, Asian markets had finished mixed.

Interest rate concerns eased somewhat after a report showed that the US CPI rose 1.7 percent year-on-year in February and a US 10-year Treasury auction of US$38 billion in notes on Wednesday was met with adequate demand.

Art Hogan of National Securities noted that the “yield on the 10-year has ceased going parabolic” while Kimberly Woody, portfolio manager at Globalt Investments, said that “bonds are still oversold”.

Wednesday, 10 March 2021

Markets rise, Nasdaq surges

Markets were mostly higher on Tuesday.

The S&P 500 jumped 1.4 percent, the STOXX Europe 600 rose 0.8 percent and the Nikkei 225 rose 1.0 percent.

However, the Shanghai Composite slumped 1.8 percent to a 12-week low.

Tech stocks drove the rally in the US, with the Nasdaq Composite surging 3.7 percent.

In Europe, the market shrugged off a report showing that the eurozone economy contracted 0.7 percent in the last quarter of 2020.

Tuesday, 9 March 2021

Markets mixed after US passes fiscal stimulus

Markets were mixed on Monday.

The STOXX Europe 600 surged 2 percent but the S&P 500 reversed early gains to close 0.5 percent lower while earlier in the day, the Shanghai Composite plunged 2.3 percent.

“Investors remain wary of the impact that the massive Biden fiscal experiment will have on longer-term interest rates, making for a fragile equity environment,” analysts at ANZ Research said in a morning note on Monday after the US Senate passed a US$1.9 trillion economic relief and stimulus bill on Saturday.

However, hedge fund manager David Tepper said “rates have temporarily made the most of the move and should be more stable in the next few months, which makes it safer to be in stocks for now”.

Monday, 8 March 2021

Central banks may be forced to tighten monetary policy

The S&P 500 rose 0.8 percent last week, snapping a two-week losing streak.

A rise in the US 10-year Treasury yield above 1.6 percent momentarily threatened the stock market after the Labor Department reported strong job growth of 379,000 in February.

However, the 10-year yield fell back later, enabling stocks to recover and end the day and week in positive territory.

Still, Alex Ross, Client Manager at Western Union Business Solutions, thinks that “the inflation beast is finally awakening”.

Ross said that the recent interest rate moves show that the bond market “is clearly seeing inflation ahead” and that central banks will eventually “be dragged kicking and screaming towards monetary policy tightening”.

Gary Biddle, professor of Financial Accounting at the University of Melbourne, warned that the stock market could collapse as a consequence.

“It is inevitable that central bankers will abandon the Covid-19 fight in their inflation fright. In doing so, they could cause markets to collapse, as they have before.”

Saturday, 6 March 2021

US stocks surge, employment jumps

Markets were mixed on Friday.

The STOXX Europe 600 fell 0.8 percent and the Nikkei 225 fell 0.2 percent.

However, the S&P 500 recovered from early falls to end 2.0 percent higher after the US 10-year Treasury yield eased back to 1.55 percent after crossing 1.6 percent.

The Treasury yield had risen early on Friday after a report showed that nonfarm payrolls jumped by 379,000 in February and the unemployment rate fell to 6.2 percent. That compared to expectations of 210,000 new jobs and an unchanged unemployment rate of 6.3 percent.

“Today’s employment report confirmed an economy poised for a broader reopening,” said Gregory Faranello, head of US rates trading at AmeriVet Securities.

Friday, 5 March 2021

Markets fall on disappointment with Powell

Markets fell on Thursday.

The S&P 500 fell 1.3 percent, the STOXX Europe 600 fell 0.4 percent and the Nikkei 225 plunged 2.1 percent.

Markets fell amid renewed concerns over higher interest rates after Federal Reserve Chairman Jerome Powell told a Wall Street Journal conference on Thursday that he expects some inflationary pressures in the time ahead.

“We expect that as the economy reopens and hopefully picks up, we will see inflation move up through base effects,” said Powell.

Powell also said that any increase in inflation will be “transitory” and that “I expect that we will be patient”.

However, Adam Crisafulli, founder of Vital Knowledge, said that Powell “failed to provide the type of reassuring comments investors were hoping for”.

“With long rates rising in response to his commentary, we are again seeing a market that is taking control of monetary policy from the Fed,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Thursday, 4 March 2021

Markets mixed, COVID-19 could become endemic

Markets were mixed on Wednesday.

The S&P 500 fell 1.3 percent, the STOXX Europe 600 was flat and the Shanghai Composite jumped 1.9 percent.

A rise in US Treasury yields early on Wednesday proved short-lived as US economic data came in below expectations.

A report from ADP showed that private companies added 117,000 new jobs in February, below the 225,000 expected by economists.

The ISM nonmanufacturing index came in at 55.3 for last month, down 3.4 percentage points from January and below the 58.7 Dow Jones estimate.

IHS Markit’s final euro zone composite PMI reading for February came in at 48.8, up from 47.8 in January but indicating that economic activity remained in contraction.

“The Eurozone faces the possibility of lapsing back into recession,” said VTB Capital Global Macro Strategist Neil MacKinnon.

And economic recovery could prove weaker than previously expected as scientists now increasingly think that COVID-19 could become endemic, with restrictions on activity required to remain in place even after vaccinations have been implemented.

Wednesday, 3 March 2021

Markets mixed, bubble fears return

Markets were mixed on Tuesday.

The S&P 500 fell 0.8 percent and the Shanghai Composite fell 1.2 percent but the STOXX Europe 600 rose 0.2 percent.

Fears of a festering equity bubble were rekindled on Tuesday.

"We are really afraid the bubble for foreign financial assets will burst someday," said Guo Shuqing, the Communist Party secretary at the People's Bank of China and chairman of China's Banking and Insurance Regulatory Commission.

Tuesday, 2 March 2021

Markets rise, rise in yields seen as “a good thing”

Markets rose sharply on Monday.

The S&P 500 soared 2.4 percent, the STOXX Europe 600 jumped 1.8 percent and the Nikkei 225 surged 2.1 percent.

Signs of stabilisation in the US 10-year Treasury yield on Monday helped lift stocks.

“Our bullish US equity view has already embedded expectations of rising interest rates,” said David Kostin, Goldman Sachs’ chief US equity strategist, in a note to clients.

“Equity investors are still looking at the rise in rates mostly as ‘a good thing’ and not yet as a threat notwithstanding some shaking of the tree in high multiple stocks and other parts of the market last week,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Indeed, strong manufacturing data also helped boost sentiment. The Institute for Supply Management’s index of US factory activity rose to 60.8 last month from 58.7 in January while the IHS Markit manufacturing PMI for the euro zone came in at 57.9, up from a flash estimate of 57.7.

Saturday, 27 February 2021

Nikkei plunges, US Treasury yields soften

Markets fell on Friday.

The Nikkei 225 plunged 4.0 percent, the S&P 500 fell 0.5 percent and the STOXX Europe 600 tumbled 1.6 percent.

US Treasury yields softened on Friday but investors remained jittery.

“Investors are actually looking at the pace at which yields drop and the current speed is quite concerning for equity markets,” said Roland Kaloyan, a strategist at SocGen.

“If the market begins to believe that the Fed has somehow lost control of where the bond market is going, all that idea of a taper tantrum will show up,” said Art Cashin, director of floor operations at UBS.

In the meantime, Quincy Krosby, Prudential Financial’s chief market strategist, noted that “credit spreads remained contained”.

Indeed, some analysts appeared sanguine.

“Yields are rising because investors are optimistic,” said Kathy Lien, managing director of foreign exchange strategy at BK Asset Management.

Keith Temperton, an equity sales trader at Forte Securities, said that “the near-to-mid-term outlook for equities seems positive”.

Friday, 26 February 2021

US stocks plunge as Treasury yields top 1.6 percent

US stocks plunged on Thursday. The S&P 500 tumbled 2.5 percent and the Nasdaq sank 3.5 percent.

US stocks fell after the 10-year Treasury yield briefly topped the 1.6 percent level on Thursday and traded at its highest level in more than a year.

Yields moved higher in afternoon trading following an auction of 7-year Treasury bonds where dealers were stuck with a much higher percentage of the bonds than the 12-month average.

“Could there be more inflation coming than what most think? Although the Fed isn’t worried about that, the market might be,” said Ryan Detrick, chief market strategist for LPL Financial.

“The Nasdaq will continue to lead the slide lower,” said Edward Moya, senior market analyst at OANDA.

Strategist Albert Edwards of Societe Generale said that “the risk is growing that with so many bubbles blown by the Fed something will burst soon”.

Thursday, 25 February 2021

Markets mixed, “dips are meant to be bought”

Markets were mixed on Wednesday.

The S&P 500 rose 1.1 percent and the STOXX Europe 600 rose 0.5 percent. However, th Shanghai Composite plunged 2.0 percent.

Christopher Metli, a quantitative and derivative strategist at Morgan Stanley, said that “dips in the equity market are meant to be bought in this environment”.

Similarly, Mehvish Ayub, senior investment strategist at State Street Global Advisors, told CNBC that fundamentals are “very good” and “this is an opportunity to buy on the dip”.

However, Ed Clissold, chief US strategist at Ned David Research, said: “Higher interest rates could moderate broad market gains, multiples should compress, and the last phase of early cycle themes could lead to Value exerting much-awaited leadership over Growth.”

Similarly, Fundstrat Global Advisors’ co-founder and head of research Tom Lee told CNBC that tech stocks will not be doing as well as the economy re-opens.

“You’re going to really want to be in asset-heavy, cyclical, economically sensitive companies,” he said.

Wednesday, 24 February 2021

Markets mixed, Powell eases inflation concerns

Markets were mixed on Tuesday.

The S&P 500 reversed a 1.8 percent loss during the session to end 0.1 percent higher.

Elsewhere, the STOXX Europe 600 fell 0.4 percent and the Shanghai Composite fell 0.2 percent.

US stocks turned around from early sharp losses after Federal Reserve Chair Jerome Powell said in his testimony to Congress that inflation is still “soft” and the economic outlook is still “highly uncertain”, easing concerns of a policy change by the central bank.

“The Fed is focused on employment and seems very willing to absorb higher inflation and excesses in financial market that brings financial instability in hopes of getting there,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Tuesday, 23 February 2021

Markets fall, Nasdaq plunges

Markets fell on Monday.

The S&P 500 fell 0.8 percent while the Nasdaq Composite plunged 2.5 percent.

Elsewhere, the STOXX Europe 600 fell 0.4 percent and the Shanghai Composite tumbled 1.5 percent.

Matt Maley, chief market strategist at Miller Tabak, said that the recent rise in US Treasury yields “should be something that investors keep a close eye on”.

However, Keith Lerner, chief market strategist at Truist, said: “Given that we are in the early stages of an economic recovery, monetary and fiscal policy remains supportive, the sharp rebound in earnings, and favorable relative valuations, we maintain our overweight to equities.”

Monday, 22 February 2021

US stock market performance “dwarfs all previous bull markets”

The S&P 500 fell 0.7 percent last week, declining in all four trading sessions.

Still, the index is up 75 percent from its low in March last year, a performance that, according to Bloomberg, “dwarfs all previous bull markets at this stage of the cycle since the 1930s”.

“Dated from the last bear-market bottom, the boom cycle is young,” the Bloomberg report noted. “But its velocity makes up for the age.”

“I don’t think we’re at bubble levels yet, but there are certainly some red flags that would indicate folks are all-in on stocks and risk,” Michael Arone, chief investment strategist for the US SPDR exchange-traded fund business at State Street Global Advisors, was quoted as saying.

Saturday, 20 February 2021

Markets mixed amid “a little bit of inflation fear”

Markets were mixed on Friday.

The S&P 500 fell 0.2 percent but the STOXX Europe 600 rose 0.5 percent.

Earlier in Asia, the Nikkei 225 fell 0.7 percent but the Shanghai Composite rose 0.6 percent.

US stocks had been mostly higher in the morning after Treasury Secretary Janet Yellen said on Thursday that a large fiscal stimulus package is necessary.

However, the US 10-year Treasury yield rose again on Friday to 1.34 percent, and JJ Kinahan, chief market strategist at TD Ameritrade, suggested that “this week may have put a little bit of inflation fear into people”.

The rising inflation concern comes amid better expectations for US economic growth.

Calculated Risk noted that forecasts for US first quarter GDP have risen, while New Deal democrat at the Bonddad blog said that strength in house and car purchases “is going to expand into the broader economy over the next 3 to 6 months unless there is an unexpected setback in the abatement of the pandemic”.

Friday, 19 February 2021

Markets fall, US job growth “will remain soft”

Markets were mostly lower on Thursday.

The S&P 500 fell 0.4 percent, the STOXX Europe 600 fell 0.8 percent and the Nikkei 225 fell 0.2 percent.

“Stocks are sliding across the board with high-multiple growth names getting hit the hardest thanks to the unrelenting rise in yields,” said Adam Crisafulli, founder of Vital Knowledge.

However, the rise in US Treasury yields paused on Thursday after a report showed that inital claims for unemployment insurance totalled 793,000 last week, above the 760,000 forecast from economists.

Gus Faucher, chief economist at PNC Financial Services Group, said that “job growth will remain soft for the next few months as the nation continues to struggle with the pandemic” but “will pick up in the spring”.

Wednesday, 17 February 2021

Markets mixed as US Treasury yields rise

Markets were mixed on Tuesday.

The S&P 500 dipped 0.1 percent and the STOXX Europe 600 closed fractionally lower.

However, in Asia, the Nikkei 225 jumped 1.3 percent and the Hang Seng surged 1.9 percent.

The US 10-year Treasury yield jumped 9 basis points on Tuesday to top 1.30 percent, a level not seen since February 2020.

Some analysts see rising yields as a threat to markets.

“The market can digest rising yields, especially when they are going up for the right reason, but not when they go up in a linear fashion,” said Art Hogan, National Securities chief market strategist.

Tuesday, 16 February 2021

Stocks rise, oil hits pandemic high

Markets rose on Monday.

The STOXX Europe 600 jumped 1.3 percent while the Nikkei 225 surged 1.9 percent to close above 30,000 for the first time in more than 30 years. US markets were closed for a holiday.

Oil prices rose, Brent crude rising 1.3 percent, a 13-month high.

“Frigid weather means that many oil wells may be shut in,” wrote oil analyst Andy Lipow wrote over the weekend.

Monday, 15 February 2021

Is a stock market crash coming?

Jonathan Ponciano at Forbes sees signs of a stock market bubble and a possible crash.

“A 12-year-old bull market; SPAC mania; IPOs that more than double on the first trading day; an army of amateur traders and GameStop mania. It certainly feels like irrational exuberance–and it triggers alarms for those who remember the dot-com bubble of the late 1990s,” he wrote.

“The parallels we have today are historically very, very concerning,” he quoted Jim Stack, president of Whitefish, Montana’s InvesTech Research and Stack Financial Management, as saying.

Ponciano wrote that out of 11 key market metrics that flashed warning signs just before the stock market crashed in March 2000, seven are signalling bearish, three bullish and one neutral.

Saturday, 13 February 2021

S&P 500 hits record high, “long way away from bubble territory”

Markets were mostly higher on Friday.

The S&P 500 rose 0.5 percent to a record high while the STOXX Europe 600 rose 0.6 percent.

However, the Nikkei 225 fell 0.1 percent, snapping a four-session winning streak.

“Between the ongoing medical and economic improvements, markets continue to expect a much better 2021 and that has supported prices,” Brad McMillan, chief investment officer at Commonwealth Financial Network, said in a note.

As for fears of a stock market bubble, Goldman Sachs' Sharmin Mossavar-Rahmani, head of the bank's Investment Strategy Group and CIO of its Wealth Management division, told Yahoo Finance Live on Friday that US equity markets are a “long way away from being in bubble territory”.

Investors shrugged off a report on Friday showing that the UK economy contracted 9.9 percent in 2020, its biggest annual fall in output since modern records began.

Friday, 12 February 2021

Stocks, US Treasury yield rise

Markets rose on Thursday.

The S&P 500 rose 0.2 percent to a record high while the STOXX Europe 600 rose 0.5 percent.

“The fiscal and monetary side of the equation seems priced into the market,” said Gregory Faranello, head of US rates trading at AmeriVet Securities.

The US 10-year Treasury yield rose on Thursday, reversing Wednesday's decline.

Ross Mayfield, investment strategy analyst at Baird, said that rising bond yields could become “a headwind to the equity markets”.

Thursday, 11 February 2021

Markets mixed, massive stimulus “should keep equities moving higher”

Markets were mixed on Wednesday.

In the US, the Dow Jones Industrial Average rose 0.2 percent to a record high but the S&P 500 fell less than 0.1 percent.

Elsewhere, the STOXX Europe 600 fell 0.2 percent but Asian markets rose, with the Shanghai Composite up 1.4 percent.

“One of the concerns is that inflation will start to take hold due to so much monetary and fiscal stimulus, which will cause the Treasury and the Fed to intervene,” said Keith Buchanan, senior portfolio manager at Globalt.

However, Federal Reserve Chairman Jerome Powell said on Wednesday that monetary policy needs to stay “patiently accommodative” to support the economy.

“Massive fiscal stimulus and an extremely accommodative Federal Reserve should keep equities moving higher,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

Wednesday, 10 February 2021

Markets mixed, Fed to remain accommodative “for a very long time”

Markets were mixed on Tuesday.

The S&P 500 fell 0.1 percent, ending a six-day winning streak. The STOXX Europe 600 also fell 0.1 percent.

Earlier in Asia, though, the Shanghai Composite jumped 2.0 percent and the Nikkei 225 rose 0.4 percent.

“We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and ‘as good as it gets’ earnings revisions,” said Jared Woodard, investment and ETF strategist at Bank of America.

A correction could well be “buyable” if the Federal Reserve remains determined to keep monetary policy easy.

“We’re going to be accommodative for a very long time because the economy just needs it to get back on its feet,” said Cleveland Fed President Loretta Mester on Monday.

Tuesday, 9 February 2021

Markets rise, US COVID-19 cases fall

Markets rose on Monday.

The S&P 500 rose 0.7 percent to a record high, the STOXX Europe 600 rose 0.3 percent and the Nikkei 225 surged 2.1 percent.

“We are still very much in a bull market at the early stages of an economic recovery that’s gaining momentum,” said Michael Wilson, chief US equity strategist at Morgan Stanley in a note.

Tony Dwyer, chief market strategist at Canaccord Genuity, said that “it would take an epic unforeseen failure in the rollout of the various vaccines to prevent the domestic and economic engine from ramping greater than most expect”.

Indeed, the US reported a 25 percent drop in new cases of COVID-19 to about 825,000 last week, the biggest fall since the pandemic started, and the fourth consecutive weekly decline in cases.

Monday, 8 February 2021

Hussman: Market in a “trap door” situation

The S&P 500 rose 4.7 percent last week, finishing at a record high.

However, even as the bull market continues, John Hussman sees a trap door opening for investors.

“I view the current combination of hypervaluation, price overextension, lopsided bullishness, and unfavorable market internals as a ‘trap door’ situation,” he wrote in his latest market commentary.

“In order to simply touch run-of-the-mill historical valuation norms, the S&P 500 would have to lose somewhere in the range of 65-70% over the completion of this cycle,” he said.

Saturday, 6 February 2021

Markets mixed, US reports weak January job growth

Markets were mixed on Friday.

The S&P 500 rose 0.4 percent to a record high but the STOXX Europe 600 was flat.

Earlier in Asia, the Nikkei 225 jumped 1.5 percent but the Shanghai Composite fell 0.2 percent.

A report on Friday showed that the US economy added 49,000 jobs in January while the data for December was revised to show 227,000 jobs lost instead of 140,000 as previously reported.

“The weakness portrayed in today’s labor report opens the door for the Biden administration to push forward with a higher spending package and provide relief for many Americans and businesses that continue to struggle with the pandemic,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.

Still, some economists are hopeful that January marks the low point for US employment.

“Much stronger jobs figures are likely from the second quarter onwards,” said James Knightley, chief international economist at ING in New York.

Friday, 5 February 2021

S& 500 hits record high, in “early stages” of bull market

Markets were mixed on Thursday.

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

“We believe that we are still in the early stages of a new bull market,” said Peter Oppenheimer, chief global equity strategist at Goldman Sachs.

“Stay overweight equities and commodities versus bonds and cash,” JPMorgan said in a note on Thursday.

Thursday, 4 February 2021

Markets rise, yield curve steepens

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 1.0 percent.

With a report on Wednesday from ADP showing private firms added 174,000 jobs in January, Mike Loewengart, managing director of investment strategy at E-Trade Financial, said that “a positive full picture is emerging” in the US.

Indeed, some analysts have noticed that the Treasury yield curve is now at its steepest since May 2017.

“It’s being driven by the fact that policy, fiscal and monetary, is allowing there to be stronger economic growth for longer, without the Fed getting in the way, and that basically is allowing the economic cycle to extend further into the future,” said Jim Caron, head of global macro strategies on the global fixed income team at Morgan Stanley Investment Management.

Wednesday, 3 February 2021

Markets rise but “huge amount of leverage” poses risk

Markets rose on Tuesday.

The S&P 500 jumped 1.4 percent, the STOXX Europe 600 rose 1.3 percent and the Shanghai Composite rose 0.8 percent.

Broad market indices rose as speculative, retail-driven stocks fell sharply. GameStop fell 60 percent while AMC Entertainment fell 41 percent.

“Upon seeing that gravity still works and fundamentals do matter, other market participants are once again comfortable going back into the market and that’s likely been driving this week’s comeback rally,” said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors.

Michael Bapis, managing director at Vios Advisors at Rockefeller Capital, told CNBC that the recent weakness spells opportunity.

“We look to buy on dips right now because there is so much cash on the sidelines that people are just waiting for the time to jump in,” he said.

Matt Maley, chief market strategist at Miller Tabak, was more cautious.

“When we saw this sell-off in the market last week, it was forced selling, it came from a huge amount of leverage in the system,” he said. “What it tells me is that, at some point, some of that margin debt, that leverage, is going to be unwound.”

While that unwinding “will create a great buying opportunity”, there “will be a deep correction”.

Tuesday, 2 February 2021

Markets rise, “pressure is now behind us"

Markets rose on Monday.

The S&P 500 jumped 1.6 percent, the STOXX Europe 600 rose 1.2 percent and the Nikkei 225 rose 1.5 percent.

However, GameStop fell 30.8 percent as it continued to diverge from the performance of the wider market.

Some analysts think that the risk to the bull market posed by retail-driven stocks like GameStop is small.

“The return of volatility over the past week has been driven by market positioning rather than worries over growth,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Haefele added that “given the speed and magnitude of flows in recent days, we think most of the pressure is now behind us”.

Sam Stovall, chief investment strategist at CFRA, said that “we don’t see the advent of a 1998-style liquidity crisis” and “we don’t think the bull has come to an end”.

Monday, 1 February 2021

Market action “reminiscent of the dot-com bubble”

The S&P 500 fell 3.3 percent last week, ending January with a 1.1 percent decline.

One stock that defied the negativity last week was GameStop, which surged 400 percent.

The rise in the video game chain’s stock came amid a tussle between retail investors buying the stock and Wall Street professionals selling it.

“Just the fact that you have a group of investors that are really chasing abnormal gains, that’s what is reminiscent of the dot-com bubble,” said James Ragan, director of wealth management research at DA Davidson.

Volatility in the US stock market rose last week, with the CBOE volatility index closing above 30 points for the first time since early November.

That volatility can become a risk for the market, especially since, as Goldman Sachs noted on Friday, “hedge fund net and gross exposures on a mark-to-market basis both remain close to the highest levels on record, indicating ongoing risk of positioning-driven sell-offs”.

Saturday, 30 January 2021

Markets fall, GameStop jumps

Markets fell on Friday.

The S&P 500, STOXX Europe 600 and Nikkei 225 all fell 1.9 percent.

“There’s way too much leverage in the system, and we’re starting to see signs that this excess leverage is going to be unwound in a way that will create headwinds for the stock market and other risk assets for more than just a few days,” said Matt Maley, chief market strategist at Miller Tabak.

Shares of GameStop jumped 67.9 percent after Robinhood said it would allow limited buying of the stock and other heavily shorted names after restricting access the day before, a move that had caused the stock to fall 44 percent.

Such volatility is raising concerns among some investors.

“This apparent budding crisis needs regulatory warnings and mainstream media alerts as to the dangers this week, both to overall markets and individual investors,” wrote billionaire bond investor Bill Gross.

Others, though, remain relatively sanguine.

“While we believe there is more pain to come we remain optimistic that it is likely to remain localized,” said Maneesh Deshpande, head of equity derivatives strategy at Barclays.