Stock Market Today: Asian stocks shot up

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Asian stocks increased for a third straight session on Monday as risk appetite bolstered recent data showing that the global economic recovery from the coronavirus pandemic is progressing well. At the same time, the US dollar fell to near its lowest level in two months.

The MSCI Asia Pacific Index saw an increase. It rose 0.2% to 699.63, the highest level since March 18.

The index has been in solid activity recently as it posted its second consecutive weekly gain on Friday and was on its way to another month of gains. Since April 2020, the index has delivered positive returns in all but three months.

South Korea KOSPI Index increased by 0.3%, while New Zealand’s stocks rose by 0.6%.

Japanese and Australian stocks dropped

Asian Stocks Surges on Trade War Easing Hopes - Finance Brokerage

Japan’s Nikkei Index is down by 0.3%. The Australian stock index decreased as well.

Risk appetite was fueled by indicators for manufacturing activity in early April last week. It indicated a solid start to the second quarter as data hit record highs in the US, indicating the end of the double-dip recession in Europe.

Investors embraced the robust data, ignoring earlier concerns about potentially higher US taxes on capital gains under the Biden administration.

US stocks closed more stable on Friday, with the S&P 500 reaching an all-time high for the day, ending its 1.1% rally. The Nasdaq Composite added 1.4%.

S&P 500 futures were slightly weaker in early Asia trading on Monday.

US GDP data for the quarter 1 will be released later in the week, and activity is expected to return to pre-epidemic levels.

ANZ economists believe that the economy will close the output gap and rise above potential in the second half of this year. Based on their estimate, as 2021 moves into 2022, the room for growth for the United States will shrink.

European stocks started the week mixed

European stocks opened mixed on Monday morning. Signs that the world economic recovery was on course failed to support risk appetite.

In London, the FTSE 100 slipped by 0.35% after the open. Meanwhile, the French CAC plunged 0.18%. The German DAX niked by 0.16%. 

It also came despite reports that Britain’s economy is projected to grow faster since the second world war in 2021. 

The EY ITEM Club, a leading UK economic forecasting group, stated that businesses had adapted better to coronavirus restrictions. Consumer spending has boomed as lockdown measures begin to ease. The group said it now projected UK GDP to grow by 6.8% in 2021. It’s a significant upgrade on the 5% growth rate it estimated in January. This would mark the fastest annual growth in national income since 1941.

Obstacles European stocks face defeating overbought

Analysts and investors point to a start to the week that invites greater tranquility. The battle between bulls and bears seems to be the least equal in the first few weeks after the short-term rebound.

The rebound in recent sessions has helped European stock markets recover much of Tuesday’s fall. Analysts believe it is a sign of strength but is more the result of upward inertia than something that invites us to buy. 

On the other hand, this rebound continues to seem quite vulnerable.

Each upward stretch in which the EuroStoxx 50 has managed to set new rising highs has caused the buying pressure to be less and less, taking it to the point of overbought that was not seen on the weekly chart since 2017 and 2015.

Last Friday, EuroStoxx closed its first week down after seven consecutive weeks of gains. Once again, it shows how exhausted the bulls are in this section of the season.

JP Morgan survey: which stock markets are going to grow this year?

JPMorgan Chase & Co spelled out on a wall in front of a building

Regarding the monthly variation, JP Morgan pointed out that in January, investor confidence decreased. Perhaps, it was due to the uncertainty created by the shortage of vaccines against Covid-19 and the unknowns surrounding its distribution. However, in February, this indicator increased again. In March it advanced from +1.7 to +4.0, the highest record in the last ten years.

Regarding the evolution of the markets in the next six months, 42.9% of the people surveyed during the first quarter of 2021 by JP Morgan believe it is probable or very probable that the stock markets will evolve positively. Meanwhile, 30.4% think they will remain stable, and 26.7% believe they will fall.

57.1% of those who are optimistic cite the stabilization of the pandemic as the main reason for the rise. Meanwhile, 28% consider that the economic crisis caused by the health situation is beginning to emerge.

However, the pandemic is also the main reason for pessimism for those who think the markets will go down. This is stated by 57.6% of those surveyed, who foresee a drop in the Stock Markets due to the coronavirus. For their part, 37.8% of the pessimists refer to the economic crisis as the main reason.

Change in trend

On the other hand, JP Morgan acknowledges a change in trend in the factors that investors consider when putting their money to work. Now, they take into account the evolution of the stock markets more than the variation in interest rates.

The firm maintains that this change could be due to a more stable activity in the stock exchanges during the beginning of the year.

Optimistic investors are betting on a rise in the markets in the next six months. They declare that they have their eyes mainly on two of them, the Asian and the European stocks. 25.4% of the surveyed believe that the Asian stock markets will benefit the next quarter, while 25.3% bet on the European ones.

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