That's how it looks, at least in the US, where the S&P500 closed yesterday's session at another all-time high. See Figure 1. After a strong correction in July/August (drawdown of as much as -13.6%), the Nasdaq 100 is still about 2% short of a new ATH.
US stocks are not hindered in their further growth by rising bond yields (yet), which mean smaller interest rate cuts in the future (than on September 18th, after the first FED’s cut - see Figure 1). It is possible that stocks are already front-running the presidential election and the seasonality related to the end of the year to some extent.
Let's look at two major Asian markets (Hang Seng and Nikkei 225 indices), which have recently been "behaving extremely" - which is well evident in their volatility and the size of drawdowns - see Figure 2.
Both Asian economies are somewhat similar to each other... trying to change the economic status quo can be associated with too much "pain"... In Japan, an attempt to increase interest rates... ended with a 25% drop in the Nikkei 225. In China, attempts to "restructure" the real estate market or increase consumer spending may also be too difficult to achieve... to succeed, they may mean too many sacrifices (i.e. cost too much). Therefore, the scenario of the zombification of the Chinese economy (similar to what happened in Japan in the 1990s) cannot be ruled out.
Investors were waiting for Saturday's press conference of the Chinese Minister of Finance. The market was expecting a fiscal stimulus announcement of 2-3 trillion yuan, but it looks like it didn't get it... and the press conference turned out to be more of a nothing-burger.. let's see how the markets react to it on Monday..
Opmerkingen