What sell-off? In a feat that has not been accomplished in more than a week, the S&P 500 on Wednesday notched a fresh record closing high.
The S&P 500 gained 0.25 per cent to 2,404, the Dow Jones Industrial Average added 0.36 per cent to 21,012.4, and the Nasdaq Composite gained 0.44 per cent to 6,163.
Last week, equities markets took a blow from rising concern over the political fortunes of US President Donald Trump.
The former businessman’s election last year helped stoke sharp gains for equities on expectations that his policies will support corporate America. That enthusiasm has ebbed and flowed as Mr Trump has struggled to dig-out of numerous scandals.
Still, after Wednesday’s gains, the most recent bout of selling has been entirely reversed and then some. The S&P 500 index is up 7.4 per cent for the year.
Investors on Wednesday parsed through minutes from the Federal Reserve’s May meeting, which set the table for next month’s meeting, which could see it raise rates for the second time this year. Investors interpreted the news as dovish on margin, however, with the US dollar slipping 0.26 per cent against a basket of six peers.
The yield on the benchmark 10-year Treasury note fell 0.0298 per cent to 2.2502 per cent.
Investors will keep a close eye on US politics next week as US President Donald Trump’s first foreign trip coincides with a growing White House scandal at home.
Here’s what to watch in the coming days.
Donald Trump kicks off his first overseas visit since becoming US president by travelling to Saudi Arabia at the invitation of Saudi King Salman bin Abdulaziz this weekend. Mr Trump is set to agree to a $10bn weapons sale to Saudi Arabia as the US seeks to boost business and diplomatic ties with Riyadh.
The nine-day tour will also see Mr Trump visit Israel and continue on to Rome before heading to a Nato summit in Brussels. The meeting comes as the president’s attempts to give Nato a more formal role in the anti-Isis coalition has faced resistance from France and Germany. Mr Trump will also attend a G-7 meeting in Sicily.
The overseas trip comes with Mr Trump under siege at home following revelations that he pressed James Comey, the FBI director who was abruptly dismissed last week, to drop a probe into the Trump administration’s ties with Russia. Mr Comey has been invited to testify before Congress on Wednesday.
Further complicating matters, new Russia claims were published just after Mr Trump departed Washington on Friday, casting more clouds over the trip even as it got underway.
After yesterday’s violent gap up in stocks across the globe in response to the “expected” outcome from the French election, today the risk on sentiment has continued if to a lesser extent, with stocks in Europe, Asia all rising while S&P futures point to a higher open. Yen, gold decline, while the euro traded as high as 1.09 this morning before fading some gains; oil is up modestly.
While today’s surge may have been more muted, world stocks hit a new record high on Tuesday, with investors still cheering Macron’s victory in the first round of the French presidential election, supported by speculation about U.S. tax reform and the overnight report that Trump has conceded on the border wall, eliminating a government shutdown as a potential risk. As shown below, the MSCI All World Index has jumped to a new all time high, boosted by strong Asian markets.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%, hovering near its highest level since June 2015 hit earlier in the session, on its fourth straight day of gains. Japan’s Nikkei rose more than 1 percent to a three-week high aided by a weaker yen. South Korea’s also advanced 0.7 percent to its highest level since April 2015. China equities climbed from a three-month low on speculation that a selloff over concerns of a regulatory crackdown were overdone. Australia and New Zealand were closed for Anzac Day.
European stocks hovered near a 20-month high, with the Dax flirting with all time highs. The Stoxx Europe 600 index edged 0.2% higher after jumpin 2.1% on Monday to the highest since August 2015, with property and technology shares helping to underpin a global rally. French shares pulled back 0.1 percent, having risen 4.1 percent on Monday in their biggest daily gain since August 2012. Futures on the S&P 500 added 0.1 percent. The index climbed 1.1% Monday to within 1% of its all-time closing high.
These gains helped push MSCI’s world stocks index to a fresh all-time high after chalking up its biggest rise since shortly after Britain’s vote last June to leave the European Union.
Former RBI governor Raghuram Rajan today warned of “policy uncertainty” for the world economy due to there being a “bunch of new leaders” who need to prove they are strong, even as he exuded confidence about all large economies doing well. Without specifically mentioning India, Rajan said, “This is the first time in a long while we have seen all the big engines firing at the same time including the large emerging markets … We have seen trade picking up. “We are seeing early signs of investment intentions. Of course there are always clouds. There are clouds this time also,” he said. In an interview to CNBC, the Chicago Booth School professor and the outspoken economist also said the “good news is some of the fears about the (Trump) administration that it would move immediately to a more protectionist stance haven’t played out”.
“There have been noises but of course the strong action that some people feared against Mexico, against China hasn’t really materialised. That’s the good news,” he said while referring to Donald Trump administration in the US. Talking about the possible risks before the world economy, Rajan who served as RBI governor for three years, said, “There is lot of policy uncertainty right now because of the work the (US) administration is going to do and how much it can achieve.
“But also there is geo-political risk. We have a bunch of strong leaders around the world who are already well entrenched in their strength. “We have a bunch of new leaders who need to prove themselves that they are strong. And in that kind of environment, who has room to back off if in fact there is a confrontation. We have many areas of confrontation.” Rajan further said as the US monetary policy normalises, “we will see more stress” on heavily indebted entities.
With ‘Never-Trump’-ers still convinced he is Hitler and ‘Trump’-ers questioning their reality at his recent flip-floppery, many in the country are asking why should we support this President (even as his approval ratings rise with each warmongering threat). Well there is a simple – and perhaps greedy – reason… the world’s debt and equity markets have gained over $8 trillion since his election and a loss of faith now may leave some big holes.
The value of world equity market capitalization and debt values reached a new record high today of $118 trillion.
This is a more than $8 trillion rise since Donald Trump was elected President and unleashed animal spirits around the world. For someone who has yet to actually put any reforms, stimulus, cuts, laws, into practice – not bad going!
The gains are all concentrated in the ever-hopeful global equity markets…
“I like a low interest rate policy, I must be honest with you,” Donald Trump told the Wall St Journal yesterday. His comments have further fired up already strong US government bonds, with the effects spilling over into European debt this morning. Like their US counterparts, German 10-year bond prices are now around their strongest point of the year.
Mr Trump’s new comments are not the only weight on global bond yields. Among other things, geopolitical nerves and the failure of his healthcare plans have also imposed a longer-term weight.
Still, 10-year Bund yields have sunk by 0.02 percentage points so far today to 0.175 per cent. (Yields fall when prices rise.) That’s the strongest level for Bunds since late December.
US yields, which exert a strong gravitational pull on other core markets, now stand at 2.32 per cent, the lowest since mid-November.
Wall Street failed to hang on to its modest gains on Friday as escalating tensions between the US and Russia over President Donald Trump’s surprise airstrike on Syria weighed on investor sentiment.
The S&P 500 gave up gains of as much as 0.3 per cent to end the day 0.1 per cent lower at 2,355.54. For the week, the index is down 0.3 per cent.
It’s a similar story for the Dow Jones Industrial Average, which closed largely unchanged for the day, as well as for the week at 20.656.10, after having advanced as much as 0.3 per cent earlier on Friday.
The technology-heavy Nasdaq Composite also ended the day flat at 5,877.81 after reaching a session high of 5,892.06.
Stocks had a choppy Friday, with the major indices swinging between minor losses and gains as the markets weighed a weaker-than-expected March jobs report against Mr Trump’s latest foreign-policy shift and a terror attack in Stockholm.
Anyone who has been involved in alternative geopolitical and economic analysis for a decent length of time understands that the establishment power structure thrives according to its ability to either exploit natural crises, or to engineer fabricated crises.
This is not that hard to comprehend, but for some reason there are a lot of people out there who simply assume that global sea-change events just happen “at random,” that the elites are stupid or oblivious, and that all outcomes are a matter of random chance rather than being directed or manipulated. I call these people “intellectual idiots,” because they believe they are applying logic to every scenario but they are sabotaged by an inherent bias which causes them to deny the potential for “conspiracy.”
To clarify, their logic folds in on itself and becomes faulty. They believe themselves objective, but they abandon objectivity when they staunchly refuse to consider the possibility of covert influence by organized special interests. When you internally dismiss the possibility of a thing, no amount of evidence will ever convince you of its reality. This is how the “smartest” people in the room can end up being the dumbest people in the room.
From Russian ties to business conflicts of interests, both Democrats and Republicans are actively working to find chinks in the President’s armor.
But for those with hope of change in their hearts, Democrat Senator Diane Feinstein says there is a possibility that Trump will eventually remove himself from office by filing his own resignation.
Speaking to a crowd during a town hall-style Questions and Answers session, Feinstein was asked how Congress is going to deal with Trump’s alleged illegal activities:
Journalist: We don’t know what’s happening but we know that he is breaking laws every day, he’s making money at Mar-a-lago, he’s getting copyrights in China, he has obvious dealings with Russia, the Dakota pipeline… there’s some many things that he’s doing that are unconstitutional… how are we going to get him out?
Feinstein:We have a lot of people looking at this… Technical people… I think he’s going to get himself out… I think sending sons to another country to make a financial deal for his company and then have that covered with government expenses… I think those government expenses should not be allowed.. we are working on a bill that will deal with conflict of interest… it’s difficult…
Videos of Feinstein speaking to what appears to be a local press pool of reporters and protesters appear below. You can jump to 1:30 in the first video to listen to Feinstein discuss Trump’s conflicts of interests, or watch from the beginning to hear Feinstein’s response to how her husband’s firm directly benefited from bills she voted into law, proving once again that the hypocrisy of socialist Congressional representatives from California has no bounds…
Apple Chief Executive Tim Cook expressed support for globalisation and said China should continue to open its economy to foreign firms, while speaking at a forum in Beijing on Saturday.
“I think it’s important that China continues to open itself and widens the door if you will,” said Cook, speaking at the government-sponsored China Development Forum.
Cook’s comments come amid rising tensions between the U.S. and China, with protectionist rhetoric from U.S. President Donald Trump sparking concern of increased trade friction between the two countries.
“The reality is countries that are closed, that isolate themselves, it’s not good for their people,” said Cook, in a rare public speech.
Apple said on Friday it will set up two new research and development centres in Shanghai and Suzhou in China.
It has pledged to invest more than 3.5 billion yuan ($508 million) in research and development in China.
Apple has been singled out in Chinese media as a potential target for retaliation in the event of a trade war.
The Global Times warned last November if Trump triggered a trade war with China, Beijing would then target firms from Boeing to Apple in a “tit-for-tat” approach.