Marketmind: Movin’ on up
By Jamie McGeever
(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever
Your capital is at risk
Whisper it, but the rebound underway on Wall Street – which is lifting markets and risk appetite everywhere – may have legs.
Even if it does turn out to be a mini rally in a broader bear market, there’s a growing sense that it has further to run in the near term. This should put Asian markets on a positive footing on Wednesday.
U.S. earnings are rolling in nicely, with some notable beats like Bank of America and Goldman Sachs. Apple’s iPhone 14 production news on Tuesday is a reminder of the challenges companies face, but more positive earnings surprises could keep the bears at bay a bit longer.
Research and investor surveys from three major U.S. banks in the last 24 hours capture the growing bullishness currently filtering through markets:
– Morgan Stanley equity guru Mike Wilson expects the S&P 500’s bear market rally to extend to 4000, or even the 200-day moving average around 4150
– Bank of America’s global fund manager survey shows the highest cash levels since 2001, and conditions for a “capitulation” of extreme bearish sentiment lately
– JP Morgan says U.S. inflation has peaked and should fall sharply to 3.2% in 12 months’ time
Interestingly, Wall Street rose on Tuesday even though bond yields and the VIX volatility index barely came down. Perhaps this is another sign of increasing resilience.
Investors would do well to not get carried away. The issues that crushed markets this year – rapid tightening of policy and financial conditions, growth fears, sticky inflation and messy fiscal policy – haven’t gone away.
Famous last words, but the immediate storm looks to have passed.
Key developments that could provide more direction to markets on Wednesday:
Canada, UK, euro zone inflation (September)
U.S. 20-year Treasury bond auction
U.S. TICs data (August)
BoE’s Cunliffe, Woods, Wilkins and Mann speak
Fed’s Kashkari speaks
(Reporting by Jamie McGeever in Orlando, Fla.; Editing by Josie Kao)