Market Insight Euphoric mood on the markets as thoughts turn to life after COVID-19
November was a historic month for stock market performance, which saw double-digit growth (of around 13%) in the final fortnight. In hindsight, the market consolidation we saw in September and October seems like a bad dream.
Two factors drove equities’ return to favour: firstly...
Market Insight Waiting has been pointless, and the feeling of déjà-vu cannot be ignored.
A writer faces many constraints when drafting a monthly newsletter. Political events are just one consideration, especially when the event in question occurs early on in the period.
The US election led us to delay...
Market Insight Market turmoil returns as the US election approaches
Last month, we said that the easy part was over for the equity markets, after a sharp rally since March 2020.
This observation dovetailed with our intention to maintain a...
Market Insight We’ve got through the easy part. Now what?
If we look back on the pessimism that prevailed in the spring, summer 2020 was full of surprises for both the economy and the financial markets. Many, often dismal, forecasts proved to be...
Market Insight Consolidation in June in an “exceptional” quarter for equities!
In essence, the general situation has not changed over the past few weeks.
On the economic front, the signs of recovery remain in place, endorsing our view of...
Market Insight Why common sense matters amid persistent uncertainty
After the largest contraction in several decades in March, stock markets – and the S&P 500 in particular – saw the sharpest jump since 1991 in April.
These erratic shifts indicate a prevailing sense of uncertainty that may leave international investors wondering how to cope with what is a historic crisis in many respects.
When panic takes hold of the markets, as it was the case in February and March, we can tend to...
Market Insight Disruption reigns supreme on the markets
What remains to be written about March 2020, which will no doubt go down in the annals of economics and finance?
The plunge of asset prices says it all: frightened by the spread of Covid-19 and the ensuing economic uncertainty, investors have given way to panic. The ability of price mechanisms to...
Market Insight Fear returns to the markets with a vengeance – as panic
At first, market participants were reassured by mounting evidence that the epidemic was being brought under control in China and this drove risk assets to new highs. Then fears intensified when it was confirmed that the virus had spread to other regions, especially Europe, leading to a sharp fall in stock markets and a retreat to the most secure assets, bonds in particular.
If we take a closer look at market behaviour since mid-January...
Market Insight Does excessive anxiety stiffle fear? Part II
Last month we examined fear, the mechanisms that feed it and its impact on the financial markets. Given the friction between Tehran and
the United States and the new coronavirus outbreak in China, January gave us much food for thought in this regard. The desire professed by both Iran and Washington to limit the threat of escalation seems to have led investors to...
Market Insight Hope for the best and prepare for the worst
The 2019 equity rally has been described as one of the least popular in history. And this comes as no surprise when we consider how hard it was for investors to make gains. To see the truth in this, we need only cast our minds back to the pessimism about the future of the stock markets prevailing at the end of last year. Few investors at that point thought that...
Market Insight On the quetzal and mariachi trail!
We are all prey to compulsive and obsessive thoughts. Personally, I tend to be overcome by a sense of dread when I am out of the office (for too long). My completely illogical fear – which I just can’t get out of my head – is that the markets will go into meltdown while I’m away. A recent business trip to Guatemala and Mexico City was no exception to the rule, especially since the performance of financial assets...
Market Insight Central bankers have done their job. What next?
Whether coordinated or uncoordinated, central banks took stronger action in September. This was due to an uncertain economic cycle, tooweak inflation despite low unemployment rates and strong trade frictions.
The attacks on oil sites in Saudi Arabia came too late in the month to influence
Market Insight Heatwave and summer storms spread to the financial markets
The resurgence in volatility and a consolidation in the equity markets over the summer proved our approach to be the right one. This was firstly the case because we faced the...
Market Insight Gone with the wind
At the end of a hectic May for the global financial markets, one could justifiably conclude that investors had grown more averse to risk, in the wake of growing economic uncertainty and unabating geopolitical tensions. In the past few months, we’ve been wary of market player sentiment – which tends to...
Market Insight A new record high in New York!
The S&P 500 achieved a new all-time high in recent weeks, buoyed by a stabilisation of the global economy thanks to Chinese economic data and US GDP figures for Q1 2019, in particular. April’s rise in risky assets was also helped by a satisfactory earnings season and political tensions – the results of...
Market Insight Liquidity alone will not be enough
After two strong months for risky assets, the situation was patchier in March. Although the equity volatility remains low, there was some pressure at the end of the month in the wake of economic figures, which do not yet provide any indication of an upturn in the global economy.
Market Insight Joy reigns supreme on financial markets
The risky asset rally that began in January continued into February, with the financial community much more upbeat.
Investors clearly got what they wanted, namely for central bankers to step back and consider the direction of...
Market Insight Calm is returning to the markets, but it remains to be seen whether this will last
Has the beginning of a new year brought investors to their senses? This is a legitimate question given the dramatic difference in the way in which markets have performed over the last two months. Rising equity markets, the rally in corporate bonds, higher 10-year US Treasury yields and a more stable US currency are all examples of...
Market Insight The end of the cycle is upon the financial community
One month seems indistinguishable from the next for investors, with November proving just as complicated as October on the financial markets. While the disruption seen in October, on the stock markets in particular, can be attributed to a downward adjustment in 2019 economic and earnings forecasts, November’s movement seems...
Market Insight Are investors starting to have confidence in the future again?
After a turbulent summer, equity markets re-bounded in early autumn. However, the air of uncertainty that drove the erratic performance of stock markets over the summer still persists.
Although investors were reassured by the United States’ more moderate tariffs on Chinese goods, the threat of a trade war has...
Market Insight What if the dollar were the main problem?
Although the situation was not catastrophic, there was no real rest this summer for financial markets, and this applies to equities, foreign exchange and, to a lesser extent, bonds. The addition of the Turkish crisis to recurring international trade disputes and the medium-term outlook for the global economy quite rightly led to a...
Market Insight Clouds on the horizon for summer 2018
It is sometimes said that meteorologists make better predictions than economists; if nothing else, this certainly puts the wisdom of listening to the latter into perspective. As summer dawns and storm clouds gather on the international horizon, we could be forgiven for wishing we had a weather forecast to shed light on the economic and financial outlook.
Market Insight Europe once again in the eye of the storm
To put it mildly, the political sphere is far from quiet at present. Donald Trump’s refusal to extend the Iran nuclear deal and the twists and turns concerning the summit between Kim Jong-un and the US President are clear examples of the current tense geopolitical climate.
Market Insight The dollar stages a comeback
Under pressure for the past few months, the dollar overcame all odds and bounced back in April, as we were expecting. Beyond this, the renewed strength of the dollar helps to explain – at least partially – a number of significant events that have affected the financial markets in recent weeks.
Market Insight Markets racked with doubt
March was not an easy month for investors as, in some weeks, risky assets experienced the kind of volatility seen at the end of January. Uncertainty about US monetary policy, which the Federal Reserve’s recent decision to raise key interest rates by a quarter of a point did little to quell, remained central to traders’ concerns.
Market Insight The expected correction is materialising (at last!)
The correction started at the end of January but it really took hold of the financial markets in February, radically changing the general climate seen at the beginning of the year. The charts provided below highlight some salient facts that have accompanied the drop in share prices. The sell-off was not particularly surprising...
Market Insight The year is off to a flying start..
January 2018 is looking like a good month for risky assets, continuing the trend of the second half of 2017. Risk appetite has remained strong among investors. Indeed, economic data continues to point to a robust upturn. The World Bank has therefore upgraded its...
Market Insight The 2017 success story and what comes
next...
2017 proved to be a bumper year for the financial markets, and the stock markets in particular. Risky assets (equities, and high yield and emerging market bonds) performed far better
than we expected a year ago. Our failing was that we, like so many others, fell into the trap of being overly cautious.
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