Unigestión | Despite macro data coming in significantly below very low consensus expectations, equity markets have rebounded more than 25% off their lows. When stock markets rally on bad news, investors often lose a sense of reality. Currently, overly bearish sentiment, improving virus-related data, some optimism about reopening the economy and backstops from both the Fed and governments seem to be the main drivers of the brisk recovery in financial markets.
Atul Singh | The coronavirus outbreak is putting a clearly unsustainable global economy to the test.Coronavirus is China’s Chernobyl. It is finishing what Trump’s trade wars started. Global supply chains will change. Trade will slowdown. The decoupling of China and the US will continue. Even as these tectonic changes unfold, a global recession has become more probable.
The People’s Bank of China pumps 1.2tn yuan into the financial system to protect the economy from the coronavirus Global stocks extended their rally last week despite concerns that the coronavirus will slow global growth. Experts at Julius Baer continue to argue that stocks are susceptible to a short-term correction and consider any weakness as an entry opportunity for long-term investors.
Santander AM | Stock markets maintain strong profits this year. The strength of the profit taking as a result of the new tariff increases to China should not hide their good behavior along the year.
Ofelia Marín- Lozano | Interest rates on 10 year sovereign bonds, which are considered “risk free rate”, are at minimum but the European Stock Exchange, the EuroStoxx50 is where it was five year ago, despite the profits have grown by near 60%… Why have they triplicated the risk premium?
Miguel Navascués | Perhaps it will not be so serious, but stock markets are falling and trembling. What has happened? Is it the Armageddon expected for over a year? The Federal Reserve is withdrawing liquidity to quickly from the global system, as can be seen in the graph: 50 billion dollars a month in a heavily leveraged global system, too much, with excessive confidence in expectations that “this time it will be different”.
A more severe than expected economic downturn, the ongoing US-China trade war, eventually a hard Brexit, and unsolved challenges such as protectionism or the lack of confidence in the euro. Here are some trends that will impact markets in 2019.
Ofelia Marín- Lozano | In recent years, one of the most repeated commentaries when recommending investing in European stock markets tends to be: Why should invest in Europe when the US stock markets outperform year after year? In 22 years of history which coincide with the birth of the Euro Stoxx 50, for the first fourteen years the two markets moved almost in parallel. Only since 2011 can a clearly superior and sustained performance by the S&P 500 be observed.
One of the most objective measures for judging whether the stock market is expensive or cheap is the dividend yield. At the moment, the main global stock markets offer real returns which are superior to those of long-term sovereign bonds. For example, 34 of the 40 biggest French firms, those which make up the CAC40, have increased dividends over the last year.