By Joyce Yu
Philadelphia, PA–Global markets started the week on a broadly cautious note with the Dow Jones Industrial Average and S&P 500 US equity index both drifting up just 0.1 per cent Monday. The Nasdaq Composite slipped 0.1 per cent.
Led by strong commodities prices, Asian markets closed higher. The European stocks followed suit on Tuesday morning, ending a three-day losing streak. U.S. stocks also looked set to open higher today.
With global monetary policy continue to remain lose and investors looking for returns, Mohamed El-Erian, chief economic adviser to Allianz, told the Financial Times that he would not be surprised if some began to take advantage of the recent wobble.
°Markets are now primed to buy the dips, and then the dips become shorter and shallower,” he said. °I would be strategically cautious, but understand if people tactically buy the dips.”
Other analysts show concerns about the ongoing turmoil in the political arena. Dalio, the billionaire founder of the world’s largest hedge fund, wrote in an essay published on LinkedIn that he is °tactically reducing our risk” because he is °concerned about growing internal and external conflict leading to impaired government efficiency.”
Mr Dalio was initially optimistic about the economic impact of Mr Trump’s policy agenda, according to a Financial Times report.
“If you look at various valuation metrics, it’s hard to argue that this isn’t an overstretched market,” said Mohamed El-Erian. EPFR data showed that the US equity funds have suffered nine straight weeks of outflows, with $4bn seeping out over the period.
In support of the expectation that the US stocks market may be set for a correction, big investors such as Pershing Square and Pimco have said they have bought protection against any turbulence。
Uncertainties over Europe’s economic outlook remain. Germany’s closely watched ZEW economic sentiment index fell by much more than expected in August, down from 17.5 to 10.0.
“The significant decrease … reflects the high degree of nervousness over the future path of growth in Germany,” said ZEW president, Achim Wambach, to CNN. “Both weaker than expected German exports as well as the widening scandal in the German automobile sector in particular have helped contribute to this situation.”
More economic events coming this week include:
Tuesday: Trade talks between U.S. and South Korea
Wednesday: U.S. weekly crude inventories data
Thursday: U.K. GDP; Central bankers meet in Jackson Hole, Wyoming
