Stocks start week in the green; bear market rally continues

📰 Global/U.S. equity futures start the new week on a positive note, continuing the modest rally on Wall Street that has pushed stocks higher – even in the face of lingering recession concerns. 

The S&P 500 is up more than 6.5% since its low last week (on Wednesday), bringing it back closer to the 4,000-point mark. Institutional investors, in particular, drove stocks higher again on overall heavy trading volume, while expectations for further rate hikes (after December 2022) fell. We saw markets bounce from oversold (near-term) regions after the sharp sell-off in May/June and most of 2022.

However, concerns about growth, inflation and monetary tightening remain and despite the current rally, Wall Street will end the first half of the year with the worst performance for equities in five decades. 

Inflation and growth data will remain in focus, while bets on further rate hikes (by the Fed) are waning. However, any sign and more convincing announcement by the Fed to stay the course of rate hikes (well into 2023) will lead to another sell-off. I see more pain ahead and expect selling to come back on profit warnings and earnings forecasts from some of the largest companies. At the same time, we can expect more rallies, especially if inflation readings show signs of peaking out – easing pressure on the Fed to raise rates.

Quarterly portfolio rebalancing by institutional investors could help equities this week, especially with considerations of whether inflation has peaked and a recession can be averted. Marko Kolanovic of JPMorgan Chase (the perma-bull) says stocks will rise 7% this week as pension and sovereign wealth funds shift exposure – optimistic, but his statements are being heard. I agree with him about Q2 ending on a positive note and possibly even starting Q3/H2 on a positive note.

Industrial metals also rallied and oil prices rose – signs of improved risk sentiment. China remains in focus – we are now seeing/hearing of COVID restrictions easing again, which is helping risk sentiment and commodity market sentiment (especially commodities). Improved risk sentiment will benefit growth stocks and riskier assets (like equities in general, commodities, and commodity-linked currencies like AUD, CAD, etc.). Lower rate hike bets on the Fed are temporarily supporting the weak EUR. 

Market participants are also watching the G7 leaders' summit to commit to indefinite support for Ukraine in defending against Russian invasion and to consider a price cap on Russian oil, as well as announcing a ban on new gold imports from Russia – all of which will have (only) temporary effects on respective assets.


🇺🇸 US Markets ➡️/↗️
Cyclical Stocks ↕️/↗️
Tech/Growth Stocks ↗️
Financial Stocks ➡️/↗️
Energy Stocks ↗️

💱 Forex Markets 
CAD, EUR ➡️/↗️

⚒ Commodity Markets ➡️/↗️
Oil prices ➡️/↗️
Gas prices ➡️
Metal prices ➡️/↗️
Precious Metals ➡️

⚡️Crypto Market ➡️

(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)

Yours, Robert ↘️↘️🤔📈🔍