Will March be a month of reversal? As February about to fade into history, let’s recapped the main market action this year.
- The past eight weeks saw rallies in most equity indices. Some completely erased the second leg of last year’s losses, such as S&P 500 (see SPY in Featured Chart), Dow, and Nasdaq (see QQQ below).
- Emerging markets also did well, such as China, which is trying to end the tariffs war. As a result, its stock market shot up (see CSI 300 Index below).
- Gold did well. Palladium surged to new highs. Crude Oil advanced, albeit hesitantly.
- Bonds were generally firm, as investors digest the Fed’s stance.
So, what will the next two months bring?
- Unless we see major bullish catalysts emerging – such as better economic data flow – stocks may see-saw at current levels. The ‘Risk On’ mode in Jan-Feb were brought about by an oversold sentiment, which has now been erased.
- Overbought instruments, like Palladium and other stocks, may correct.
- Await new monetary signals from central banks. The Fed ended 2018 on a hawkish note, ie a hike in Dec-18, but completely changed its mind a few weeks later. Investors are waiting if new monetary stimulus will emerge from the major central banks (Fed, ECB, BoJ, BoE, or PBOC).
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Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.