Wij gebruiken een aantal cookies om u de best mogelijke browser ervaring te bieden. Door deze website te blijven gebruiken, gaat u akkoord met ons gebruik van cookies. U kunt hier meer leren over ons cookie-beleid of door op de link te klikken onderaan iedere pagina van onze website.
The market took it as a sign that the Fed will not be altering its tapering program and we saw the US equities starting to go south. Adding to this, there are concerns that valuations are stretched. The intraday VIX overnight moved up above 13, from below 12. This is the biggest intraday move since the start of the year. There is still room for improvement before we enter a feared territory, though a lot will depend on earnings this week.
The negative we have been getting from US retailers is that they are struggling to meet sales targets such as Lululemon. This sends a signal that retail sales might not be as robust going forward. The heavy promotions towards the end of last-year, which resulted with positive retail sales data, were mainly due to white goods and auto sales. The reliance on big ticket items could come to an end if Americans are skimming on unnecessary items.
This fundamental issue is putting investors on caution of the US market and limiting the ‘buy on dip’ mentality. The question is how much of an upside potential is there at this point?
Asian markets on the other hand are fighting back and not lagging behind developed markets, like we saw last year. Depending on which country, there are those outperforming (Taiwan, Jakarta Composite, Sensex and Philippine index) and those underperforming (Shanghai composite, Nikkeiand Kospi) year-to-date compared to the US indices. European equities have held up the best in comparison to the rests, most markets are holding on to a slight positive in the year-to-date return.
In general, there is an acceptance that China will slowly grow to below 8% and India’s economic growth will be close to 5% at best. Economic development in Asia is not a direct correlation into the stronger equity markets. The views investors have taken into account are forward projections and risk appetite as they play a bigger role in determining price movements.