· Bank of America indicator nearing sell territory
Does the fact that subsectors of Reddit stocks and faddish green-energy plays get overblown and then punctured without undermining the big-cap indexes say they aren’t dangerous? Or is the fact that a few days of headlong buying in small short-squeeze stocks late last month triggered a quick 4% S&P 500 spill a warning that the erratic tremors can’t always be safely dissipated through the market’s foundation?
A year ago, Bank of America global strategist Michael Hartnett was telling investors to keep playing risk assets “until investors grow more clearly ‘euphoric,’ which he expects will mark the moment of ‘peak positioning and peak liquidity.’” Hartnett is holding that same vigil now, his Bull & Bear Indicator correctly keeping investors involved but inching up to a contrarian Sell threshold (which has preceded corrections in the past and was last hit in early 2018).
All of this goes back to the thought aired here in early January that 2021 presents as a novel blend of 2010 and 1999 – the first full year of a new bull market riding long-acting recovery forces, blended with the final year of a powerful bull market that blasted through every upside target and created levels of excess that took a couple years to work off.
Interestingly, though, the core of the market captured by the S&P 500 is metabolizing this mixture with a rather steady and well-behaved - one might even say boring - uptrend. At least for now.
· Asian shares hit new peaks, oil up on Middle East tensions
Asian shares advanced to record highs on Monday as successful coronavirus vaccine rollouts globally raise hopes of a rapid economic recovery amid new fiscal aid from Washington, while oil prices rose on heightened tensions in the Middle East.
The signals for Europe and the United States were positive too, with futures for eurostoxx 50 up 0.5%, those for Germany’s DAX rising 0.7% and London’s FTSE futures climbing 0.8%.
E-mini futures for the S&P 500 were up 0.5%, though U.S. stock markets will be closed on Monday for the Presidents Day holiday.
MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 0.6% to 738.23, with all major indexes in the green.
The highlight of the week will probably be minutes of the U.S. Federal Reserve’s January meeting, where policymakers decided to leave rates unchanged.
Data on inflation is due from the UK, Canada and Japan, while Friday will see major economies including the United States release the preliminary February purchasing managers’ indexes (PMI).
· Japan's Nikkei closes above 30,000 on earnings rebound, economy growth hopes
Japanese shares surged on Monday to close at over 30-year high on rising expectations for a rebound in corporate earnings and economic growth.
The Nikkei index ended up 1.91% at 30,084.15, reclaiming the psychologically important 30,000 level for the first time since August 1990. Energy, healthcare, and industrial shares led the gains.
The broader Topix rose 1.04% to 1,953.94 to close at its highest since June 1991.
Shares of companies that have reported positive earnings rose, as investors continued to bet on sectors expected to perform well as the global economy recovers from the coronavirus pandemic.
· European stocks climb on vaccine rollouts and recovery hopes; Vivendi up 17%
European markets advanced on Monday after a rally in Asian shares overnight, with successful vaccine rollouts fueling hopes of a global economic recovery.
The pan-European Stoxx 600 climbed 0.6% in early trade, with basic resources jumping 2.5% to lead gains as almost all sectors and major bourses entered positive territory.
European stocks received a positive handover from Asia-Pacific. Japan’s Nikkei 225 surged past the 30,000 level for the first time in more than 30 years, after government data showed the Japanese economy growing 12.7% on an annualized basis between October and December 2020.
Markets in China, Hong Kong, Taiwan and the U.S. are closed on Monday for holidays.
Oil prices spiked overnight amid fears of an escalation of tensions in the Middle East, after a Saudi-led coalition fighting in Yemen claimed to have intercepted an explosive drone fired by an Iranian-backed Houthi rebel group. Brent crude was up 1.35% at $63.27 per barrel on Monday morning in Europe.
In other news, the U.K. has now issued a first Covid-19 vaccine dose to more than 15 million people across all four of its top priority categories, in what Prime Minister Boris Johnson described over the weekend as an “extraordinary feat.”
In Spain, Catalan separatist parties increased their majority in the Catalonian regional parliament on Sunday, despite a strong showing from the local branch of the country’s ruling Socialist Workers’ Party, setting up potential negotiations between regional separatists and Madrid.
Euro zone finance ministers will meet virtually on Monday to discuss the bloc’s economic recovery.
Reference: CNBC, Reuters
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