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We also have limited resources and face many challenges( both internal & external), making it difficult to achieve our goals.
I am Damodhar Mata. Author, blogger & Financial Advisor in Dubai with more than a decade's experience helping people make wise money decisions.
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Up up but how far away?
The U.S. markets were up last week, reaching record highs in response to robust corporate earnings.
The S&P500 ended the week up at 4,544.90, the DOW at 35,677.02, and the Nasdaq at 15,090.20
As of last week, 117 S&P 500 companies have reported actual results for Q3 2021. Of these, 83.8% have reported earnings above analyst estimates.
Investor sentiment is positive, pushing the Volatility Index (VIX) to its lowest level since March 2020. The VIX is used to measure the level of risk, fear, or stress in the market when making investment decisions
Hopes for additional fiscal stimulus also contributed to positive investor sentiment. U.S. President Biden said that his party was close to striking a deal on the social infrastructure bill.
European equities were also up on global cues and strong corporate earnings. The Euro Stoxx index was up by 0.53%, but the UK FTSE and Germany's DAX were down by 0.41% and 0.28%
Evergrande's coupon on a 2.2Billion bond before the end of the grace period and assurances by Chinese officials to support the real estate sector calmed investor fears.
CSI 300 benchmark rose 0.6%, and the Shanghai Composite Index added 0.3% in response.
Indian markets ended the week lower despite positive global cues due to rising oil prices and profit booking. The Sensex was down by 0.79% to close at 60,821.62, and the Nifty was down by 1.22% to close at 18,114.90
Up, up but how far away?
While everything looks good and positive, the looming question is, How far can the markets go from here?
As the outlook remains bullish, investor complacency can set in quickly, exposing portfolios to high-risk assets.
Now is an excellent time to review your portfolio, trim risk if necessary, and diversify into cash, and investment-grade bonds
I hope you found this market update useful.
Let me know your thoughts on this rally, and where do you think the S&P500 will be at the end of the year?
Link to Linkedin Poll - https://www.linkedin.com/posts/damodhar_stockmarket-nasdaq100-sp500-activity-6857937332004298752-_tG6
Weekly Market Update - Tug of War
In the stock market tug of war, the bulls are back in the game.
A solid start to the earnings season and positive economic data raised investor confidence last week. They continued to buy the dip on the evidence of peaking supply chain bottlenecks and the easing of the delta variant spread.
The markets started the week in the red as the oil prices continued to rise, but the bulls charged back on Thursday as the earnings season officially started.
The S&P 500, DOW, and the Nasdaq recovered from the lows of September and are now only marginally short of their all-time highs.
As expected, the FOMC meeting minutes released on Wednesday confirmed the beginning of Taper before the year-end. However, an interest increase is unlikely, at least for a year, so the monetary policy will continue to support the economy and markets.
European equities were also up in the hopes of solid economic recovery and strong corporate earnings. The Euro Stoxx Index was up by European STOXX Europe by 2.65%. Individual country indices were as follows;
France’s CAC 40 Index gained 2.55%.
Germany’s Xetra DAX Index was up by 2.51%.
The UK’s FTSE 100 Index advanced 1.95%.
Italy’s FTSE MIB Index rose 1.68%.
Japanese stocks’ returns were positive during the week, with The Nikkei 225 Index rising 3.64% and the TOPIX Index gaining 3.16%.
Halloween started early in China this year as investors remained spooked by real estate debt default and the energy crisis.
Chinese markets were flat as the CSI 300 Index gained 0.3% and the Shanghai Composite Index dipped 0.6%
Investors in India were buoyed up in the Dusshera spirit, global cues, and robust corporate earnings. The Nifty breached the 18000 level to end at 18,338.35 and the Sensex at 61,305.95.
In the latest report, IMF stated that the Indian economy will grow by 9.50% in 2021 and by 8.50% in 2022. While the global growth numbers are expected to be down marginally from 6.00% to 5.9% in 2021 and 4.9% in 2022
The Tug of war between the bulls and bears is very likely to continue over the next few months, as the markets face the following positive and negative factors;
Strong earnings supporting valuations
The upcoming festive and holiday seasons typically is good during bull runs
Expanding global economy
Record stock buybacks
Supply chain bottlenecks are persisting and could affect retail sales during the holiday season.
High inflation is also continuing longer than expected, and it could impact corporate earnings and investment.
Valuations are still high for a fragile state of the global economy.
An increase in interest rates earlier can trigger a liquidity crisis.
Energy demand and prices are still high, while the supply is not catching up.
As stated earlier, if you were uncomfortable with the pullback in September, it means your portfolio is not aligned to your risk profile or investment horizon.
Use the current rally to realign your portfolio to your investment goals, horizon, and risk appetite.
I hope you found this market update useful.
Feel free to comment and share with your family, friends, and colleagues.
Arrange a Free Portfolio Review Session and receive a detailed rebalancing report.
Weekly Market Update - Energy, Inflation and Value Shopping.
After reading all the negative news during the weekend, investors with an itchy-trigger-finger clicked the sell button on Monday last week. The markets opened in the red as the energy demand and prices skyrocketed.
US crude oil prices climbed for the seventh week in a row to almost $80 a barrel. Oil, gas, and coal prices continue to rise due to increasing consumption and supply chain fears.
Later in the week, the markets rose sharply to pare the losses as a temporary deal to raise the debt ceiling by USD 480 billion was signed. This puts to rest the concerns of the government shutting down or the US treasury default until December 2021.
By the end of the week, The S&P 500 was up by 0.8%, the DOW by 1.2%, and the Nasdaq by 0.1%.
The Earnings season is back in action with a positive outlook, with major banks set to release the Q3 results during the week.
Thanks to stellar earnings growth in Q1 and Q2, S&P 500 companies' dividend payout has increased by $20.90 billion this year. According to S&P Dow Jones, this is the most significant net gain in the last nine years.
Although volatile during the week, European equities ended the week higher. The Euro Stoxx index was up by 0.97%, and so were individual country indices, with Italy's FTSE MIB Index being the highest climbing 1.70%.
Natural gas prices rose to record levels as demand increases and supply is short. With the economy opening up and the winter around the corner, energy demand will continue to increase in Europe.
Stocks in Japan continue to slide for the third week in a row, as the Nikkei index fell by 2.51% last week.
Despite energy shortages and corporate debt crisis the CSI 300 Index was up by 1.31%, and the Shanghai Composite Index gained 0.67%.
With celebrity investors like Charlies Munger leading the way, investors are looking beyond China's regulatory challenges and debt crisis to buy the dip.
Both on global cues and accommodative monetary policy, Indian equities ended the week on a high note.
During the week, the Sensex gained 1,293.48 points, settling at 60,059.06, and the Nifty rose by 363.15 points to settle at 17,895.20.
Rating agency Moodys upgraded the Indian sovereign outlook rating from negative to stable as India is slowly emerging from the COVID crisis.
The Rupee continues to depreciate reaching 20.50 to AED on Friday. Expats in UAE were unsure whether to be happy for being able to send more rupees home or be concerned about their declining wealth when expressed in AED or US Dollar terms.
With appreciating dollar, rising energy costs and potential increase in interest rates, Indian equities could see some volatility in the short run.
While investors were value shopping for companies like Alibaba, I was shopping for groceries during the weekend and noticed a significant increase in prices across the board!
Did you also see this increase?
Dairy, pulses, vegetable, and meat prices have risen significantly, with some items witnessing double-digit growth in prices.
The rents and property prices are also increasing sharply, indicating a bullish trend in UAE. Hopefully, the salary rises come next year as predicted by analysts.
While the recent increase in inflation impacts many households' budgets, it also highlights the impact of inflation in the future.
Inflation is the most potential, but least understood financial risk. It works against you relentlessly, eating away the purchasing power of your wealth.
With the interest rates expected to be low for at least a few years, the only antidote for inflation is diligent savings and prudent investing in assets in line with your risk appetite and financial goals.
Continue reading on https://www.financialplanningindubai.com/blog/energy-inflation-and-value-shopping
The Bears Return...
As expected, the bears came out of a six-month-long hibernation in September, bringing the S&P 500 down by 4.89%. A typical correction during a bull market, blown out of proportion by the media.
Despite the pullback, the S&P 500 is still up by 16% YTD; the Dow and Nasdaq are up by 12.2% and 13.00%, respectively.
A slew of positive economic data and a potential oral treatment of Covid-19 announced by Merck boosted investor sentiment on Friday.
While the Democrats and the Republicans are still split on raising the debt ceiling, an interim spending bill was passed, to fund the government until early December.
The debt ceiling is very likely to be raised just before the deadline, but not without political drama, with each side trying to make the best of this stalemate.
Volatility is likely to continue in October a supply chain bottlenecks, inflation and tapering fears persist.
Driven by concerns about growth and inflation, European equities declined sharply last week.
The Euro Stoxx index was down by 2.24%
Germany’s Xetra DAX Index lost 2.42%
France’s CAC 40 Index declined by 1.82%
Italy’s FTSE MIB Index slid 1.36%
UK’s FTSE 100 Index was down by 1.36%.
Shares in Japan also declined sharply as the Nikkei index was down by 4.89% last week. Former foreign minister Fumio Kishida won the Liberal Democratic Party’s (LDP) presidential election by beating Taro Kono. He is very likely to succeed Yoshihide Suga as Japan’s prime minister.
Chinese equities were flat, with the CSI 300 Index of large-cap stocks was up, and the Shanghai Composite Index was down from the previous week.
Indian equities were down on global cues and profit booking, breaking a five-week winning streak. Sensex was down by 2.10% to close at 58,765.58 points, and the Nifty was fell by 1.7% to settle at 17,532.05 points.
In the UAE, the EXPO 2020 commenced on Thursday with a grand opening ceremony.
With 191 countries participating in the six-month-long event, the EXPO 2020 aims to inspire collective and meaningful action to address the world’s most critical challenges and opportunities.
Despite the sharp correction last month, investor confidence is still strong, and “Buy the Dips” seems to be the mantra for now. If you are uncomfortable with the recent correction; likely your portfolio is not aligned with your risk appetite. Speak to your financial advisor to review and realign your portfolio to your investment goals and risk appetite.
A False Alarm! - Weekly Market Update
It was like unwelcome rain on a desert safari on Monday last week when the markets were down across the world.
Even before the week started, the Chinese Evergrande debt default crisis was at full steam. Additionally, the US debt ceiling, potential tapering this year, cryptocurrency crash and the inflation woes pulled back the global markets.
After Wednesday's FOMC meeting, Chief Jerome Powell announced that the interest rates would remain at zero, and the bond purchases would also continue at the current pace. He added, "Policy will remain accommodative until we achieve maximum employment and price stability goals." Members of the Fed committee were split on the interest rate revision, with at least 50% indicating an increase in 2022. Many analysts are interpreting this as a hawkish tone. However, the markets have almost ignored this and all other negative news and rallied from Wednesday to reverse the losses.
While the Evergrande debt crisis is far from over, investors globally breathed a sigh of relief when the company paid the interest payment due to local bondholders. Thankfully this made in China crisis doesn't seem contagious, at least for now.
Given the pent up savings and the resilient bull run, investors waiting on the sidelines; rushed in to buy the dip. Both the S&P 500 and the DOW recovered to end the week marginally up by 0.2% to 4,455 and 0.1% to 34,798. The Nasdaq index was marginally down the third week in a row, ending at 15,048. While the indices were down marginally, the average shares were down by almost 14% on Monday. It highlights the benefit for retail investors of investing in well-diversified Mutual funds or ETFs instead of concentrated stock portfolios.
The Chinese debt crisis could only cause a minor dent in investor confidence in Europe. They are pretty optimistic about continuing economic expansion, despite concerns about a gradual withdrawal of central bank support.
The Euro STOXX Index was up by 0.31%, Germany's Xetra DAX rose by 0.27%, France's CAC 40 Index gained 1.04%, Italy's FTSE MIB Index rose by 1.01%. The UK's FTSE 100 Index was also up by 1.26%.
Stocks in Japan were down last week, with the Nikkei 225 Stock Average closing at 30,248.81. The latest pre-election polls continue to favour Taro Kono to replace outgoing Prime Minister Yoshihide Suga. It is expected that he will support additional stimulus measures and the central bank's current accommodative policy.
Chinese stocks were flat during the week, thanks to the central bank's $18.6 billion cash injection into the system. It is now more or less clear that China will let Evergrande fall, but in an orderly fashion with a proper restructuring. The company still has many assets(core property, an electric vehicle business and a property services unit) that can be disposed to reduce its debt. The last week's crisis call now seems more like a false alarm, given the negligible percentage of Evergrande's debt to China's total banking assets.
While the global markets were on a roller coaster ride, Indian markets continued their upward swing last week. Sensex breached the 60,000 mark on Thursday to end the week up by 1.75% at 60,048.47. Nifty was up by 1.52% to settle at 17,853.20. The Indian economy is on track to grow by 10.00% in 2021 and by 7.50% in 2022, boosting the confidence of both domestic and FII investors.
Despite intermittent challenges, the investor confidence is still high and "Buy the Dips" seems to be the mantra, at least for now. Retail investors are better off staying invested in a diversified portfolio of quality Mutual funds/ETFs. Concentrated stock portfolios or leveraged positions are more prone to market risks in the event of a correction or crash and hence may be avoided.
The GAiM Plan Podcast - Weekly Market Update - Taking a breather...
The S&P 500 has soared more than 35% in the last 12 months, and it looks like the bulls are taking a breather in September. The Nasdaq, S&P 500 and DOW were down marginally for the second week in a row. However, the small-cap Russell 2000 Index managed to stay in the green.
Trading volumes were still substantial, with 3.3 billion shares changing hands on the NYSE and 6.4 billion shares on the Nasdaq.
Although still high, Core inflation eased to 4% from 4.5% in June, confirming Fed's stance that inflation is transitionary. Markets see this as good news as it allows the monetary policy to remain accommodative for some more time.
The markets continue to seek direction amidst the Delta variant uncertainties, the timing of tapering and persisting supply chain challenges.
Next week's Fed meeting outcome could give markets some direction, depending on its stance on the tapering and the monetary policy as we advance.
Shares in Europe also continued to decline as the virus is still taking its toll. The EURO -Stoxx Index was down by 0.97%.
-Italy's FTSE MIB Index was up by a tiny margin
-Germany's Xetra DAX was down by 0.77%
-France's CAC 40 slipped 1.40%
-UK's FTSE 100 was down by 0.93%
Japanese stocks continued to rise for the second week in a row as the presidential campaign began. Pre-election polls by Bloomberg indicate a victory for Taro Kono. More stimulus and the extension of the accommodative monetary policy is expected if he wins the election.
A fresh coronavirus outbreak in Fujian province sent the stocks prices tumbling in China. The CSI 300 index fell 3.1%, and the Shanghai Composite Index fell by 2.4% last week.
Evergrande Real Estate Group - Too big to fail or too tough to save? China's second-largest property developer is stuck in a $301 billion debt crisis. The Chinese central bank has infused 14 Billion dollars in an attempt to save the company. It is still unsure if the company will make the payments due on 20th Sep 2021.
While markets in the west and China are struggling, Indian markets continue to rise for the fourth consecutive week. Market sentiments continue to improve in response to the support measures announced by the central government.
Both Sensex and the Nifty scaled new heights to close at 59,015.89(up by 1.22%) and 17,585.15(+1.24%), respectively. The Midcap and the small-cap indices also were up by 1.38% and 1.31% last week.
Despite the September blues, market fundamentals are still strong. The positive earnings outlook, growing economy, and low interest rates will continue to fuel the bull run, but with increased volatility!
Whether it is Holistic Financial Planning, Investment Advice, Life and Critical Illness Insurance, or robust portfolio management, whatever your needs are, we can help. Arrange a free consultation now by clicking the link below.