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Source: Bloomberg Terminal
For the traders returning from the Christmas break, the sudden surge in the Dow Jones Industrial Average is probably the main event of significance to monitor. Major US equity benchmarks experienced the biggest daily gain in a decade. Until recently, those benchmarks were flirting with the bear market levels.
What has changed? “A tremendous opportunity to buy” and “I have great confidence in our companies.” were the comments from President Trump on the stock markets.
The President may have encouraged the “buy-and-dip” strategy so when Amazon reported record-breaking sales, bulls came in with force, and Wall Street soared.
Source: Bloomberg Terminal
US500
Source: Bloomberg Terminal
Consequently, Asian stocks and the Australian equity benchmark are finding support from a historic night on Wall Street.
World Equity Indices
Amid the recent ‘Global Stock Rout’ the S&P TSX ended October down 6.51% following a somewhat hard month. However, during this risk-off flight to safety, the S&P TSX Index may have had its pain exacerbated by the heavy makeup of energy companies populating the Canadian index.
As discussed in previous articles – Oil – Can basic Economics be responsible for an 11% decline – Oil has seen some very aggressive sell-offs. Current market conditions have the commodity breaking below the $50 a barrel level amid supply concerns and growing global tensions. Keep in mind with Canada’s energy companies occupying an 18.6% weighting of the S&P TSX; undoubtedly this has been a weight around the Index’s neck dragging it lower.
Source: Bloomberg Terminal
Investors welcomed the relief rally. However, it may be too early to cheer up the recovery as the equity markets are still battling weak fundamentals, concerns over slow growth, trade tensions, political turmoil and higher borrowing costs.
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