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.

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.

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.

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”.

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.

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.

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”.

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.

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.

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.

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.”

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.

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.

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.

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.

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”.

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”.

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.

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”.

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.”

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.

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.

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.

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.

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.