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Extreme fear? Serious? † Financial item


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A look at the day ahead at the markets of Julien Ponthus.

You might think that, with CNN’s popular investor sentiment stuck on “extreme fear,” it would take some serious good news to jack up the markets these days.

But all it took yesterday was a dash of COVID-19 optimism from China and solid US retail data to send global stock markets back into a merry bullish risk-on mode.

Technology and growth stocks that many investors would no longer touch with a barge outperformed Microsoft, Apple Tesla and Amazon which lifted the S&P 500 and Nasdaq.

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The bullish mood was hard to reconcile with BofA’s self-described “extremely bearish” monthly survey that found fund managers haven’t been so underweight equities since May 2020.

Supposedly weary traders were also more than happy to push the dollar further away from its two-decade high from last week, plunging into riskier currency bets across Oceania, Asia, Europe and even cyberspace, with bitcoin claiming $30k.

The upward thrust from dollar rivals came with rapidly rising bond yields reflecting confidence that central banks could continue their monetary tightening despite lingering fears of a recession and Citi’s economic surprise index falling into negative territory.

Even US Federal Reserve chairman Jerome Powell, who insisted that interest rates go as high as necessary to tame inflation, didn’t deter the buy-the-dip crowd.

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However, as it looks in Europe this morning, the latest batch of data could make the bulls hesitate before trying to pursue this tentative uptick further.

Think about this: In the past few hours, Japan announced its economy contracted in the January-March period, China said new home prices fell in April, and Britain just unveiled its highest inflation rate since the 1980s with as much as 9% in April.

Key developments that should give more direction to the markets on Wednesday:

– Australia’s first quarter wage increases disappoint, take the heat out of the tariff discussion

-Philippine c.bank says ready to act against inflationary pressures

-The profit of the Dutch bank ABN Amro exceeds estimates in the first quarter

– UniCredit, Commerzbank discussed merger in early 2022, but suspend plan

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Aviva targets on track as general insurance sales rise 5% in Q1

– German Finance Minister Christian Lindner and European Commission President Ursula von der Leyen attend the annual press conference of the German Economic Council

-The President of the European Central Bank, Christine Lagarde and member of the Executive Board of the ECB, Fabio Panetta, participates in the meeting of the finance ministers and the governors of the central banks of the G7

– Federal Reserve Bank of Philadelphia President Patrick Harker Talks Economic Outlook for Virtual Mid-Size Bank Coalition of America CEO Talk

(Reporting by Julien Ponthus; editing by Saikat Chatterjee)

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This post Extreme fear? Serious? † Financial item

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