Suddenly, Bulls Return to Global Markets


After months of pain, global stocks and assets are trying to rebound.

The last two sessions have brought a sudden flow of positive news. So far, it seems to be shifting sentiment away from trade wars and currency crises to optimism and value hunting. We’re seeing that in the euro (@EC) and emerging markets.

These are the items today:

  • Turkey’s central bank defies President Erdogan with a huge interest-rate hike of 625 basis points (6.25 percent points). That’s positive for the lira, whose monster selloff in August cast a pall over global markets.
  • Washington and Beijing are talking to each other again over trade. This news lifted Chinese stocks in the overnight session.
  • The euro is rallying after a European Central Bank meeting reiterated plans to reduce easy money in the region.

Those headlines follow other positives on Wednesday:

  • Boeing (BA) raised its estimate for Chinese airplane demand by 6.2 percent. Remember, BA has gone nowhere all year amid the trade worries. Caterpillar (CAT), which is in a similar boat, closed at its highest level in almost three months.
  • Germany’s ZEW economic sentiment index rose to -10.6, better than the -13.5 consensus estimate.

Furthermore, inflation’s running cold in the U.S. August’s producer prices and consumer prices rose less than expected, on both a headline and core basis. While this isn’t good for global stocks per se, it takes some hawkishness away from the Federal Reserve. That, in turn, is marginally positive for foreign currencies.

In conclusion, there’s been a one-way drumbeat of negativity toward global assets for months. But they’re finally getting some positive news and trying to bounce.

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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.