Spreadex Market Analysis: Investors Worry As Bull Market Continues

AM Analysis – “A dour session overnight in Asia” – Max Cohen
A dour session overnight in Asia reflects the uncertainty surrounding global markets following the disappointing U.S jobs data released yesterday afternoon. It effectively ended any hopes of seeing tapering before the year end, U.S nonfarm payrolls increased by 148,000 workers in September, considerably less than expected. Additionally whilst the employment gain in August was revised up, the July figure was revised down to be the weakest since June 2012.

The report suggested the economy was losing momentum even before the U.S. fiscal standoff that partially shut down the government for more than two weeks, lending credence to the central bank's decision to hold off on reducing its stimulus. The majority of economists surveyed believe that the Fed will reduce monthly bond purchases to $70 billion by March 2014.

The S&P 500 is now trading 23 percent higher in 2013, fuelled by unprecedented Fed stimulus and better-than-estimated corporate earnings. Earnings beat analyst estimates at 74 percent of the 141 companies in the S&P 500 that have released their results so far this reporting period, while 53 percent exceeded sales projections.

PM Analysis – “Investors are worrying about what might happen next” – David White
European benchmarks closed lower today on sentiment that saw investors, wary of how well equities have performed recently, pull money from risk assets. The nervousness has returned, allowing markets to continue climbing a wall of worry.

But this worry of how less cheap stocks are is a nice problem to be presented with. Indeed, rather than be concerned over sovereign default or a debt crisis, investors are worrying about what might happen next, where the next reason to sell comes from. And it is against those concerns that a bull market develops.

So long as negative news flow remains largely absent but with investors cautious, improving macro trends and cheap money could allow for the market to continue its gain into the end of the year and perhaps beyond. Barometers of money flow, economic health and consumer activity will be watched closely.

[The original articles by Spreadex can be found here.]

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