Latest news with #marketrally
Reuters
27-05-2025
- Business
- Reuters
Trading Day: Japan spreads long bond relief
ORLANDO, Florida, May 27 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist Reasons to be cheerful A tariff reprieve from U.S. President Donald Trump, a surprise bounce in U.S. consumer confidence and a slide in government bond yields sparked a rally across most markets on Tuesday, particularly U.S. assets, with Wall Street, Treasuries and the dollar all outperforming. In my column today I look at how much the dollar may need to fall if the Trump administration is to succeed in making a significant dent in the U.S. trade deficit. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Japan spreads long bond relief Global liquidity returned to more normal levels on Tuesday as UK and U.S. markets re-opened after the long weekend, and investors mostly scooped up whatever they could get their hands on. There were good reasons to feel bullish: President Trump extending his deadline for imposing 50% tariffs on European Union goods to July 9, relief at the long end of the Japanese Government Bond market, and a spike in U.S. consumer confidence. There will be more back-and-forth in Trump's tariff pronouncements in the weeks ahead, and there is a case to make that each positive turn will deliver diminishing returns for markets. The next big deadline is July 9, when Trump's pause on his reciprocal tariffs with the rest of the world also expires. Similarly, consumer confidence in the U.S. and elsewhere is liable to be volatile, difficult to predict amid such heightened uncertainty, and susceptible to the tariff headlines of the day. That said, if Trump's tariffs deliver a one-off price shock and no lasting inflationary pressure beyond that, consumer confidence may continue to improve. Economists at Citi, for example, forecast year-end inflation of 3.2%, not too much higher than the current rate of around 2.5-2.7% and well below some of the gloomier forecasts of 4% or higher. Perhaps the most interesting market moves of the day came from Japan, where ultra-long JGB yields clocked some of their steepest one-day falls after sources told Reuters the Ministry of Finance may consider trimming issuance of long-dated paper. These yields had last week spiked to record highs on growing jitters about Tokyo's deteriorating public finances and an alarming drop off in investor demand. Tuesday's rally in JGBs spread to long-dated U.S. bonds, which have also come under heavy selling pressure on concerns about Washington's fiscal indiscipline and drawn weak demand at auction too. Analysts at Morgan Stanley on Monday recommended going outright long on 10-year Japanese Government Bonds at 1.505%, which was the yield's high that day. But they remain more cautious on the long end, despite Tuesday's rebound. A more "lasting solution" to the recent market turbulence, they argue, will require an increase in Bank of Japan purchases or less supply from the Ministry of Finance. Or both. Looking ahead to Wednesday, the global session will kick off with an expected interest rate cut in New Zealand, span a 40-year bond auction in Japan and a five-year note sale in the United States, and wrap up with chipmaker Nvidia's quarterly earnings after the Wall Street close. Historic dollar fall needed to eliminate US trade deficit If the United States is to significantly reduce or, whisper it, eliminate its trade deficit, the dollar will probably have to weaken a lot. How much is unclear, though, as history shows large dollar declines are rare and have unpredictable consequences for trade. Reducing the U.S. trade deficit is the key goal of Trump's economic agenda because he believes it reflects decades of other countries "ripping off" America to the tune of hundreds of billions of dollars annually. Stephen Miran, chair of the Council of Economic Advisers, published a paper in November titled "A User's Guide to Restructuring the Global Trading System" in which he argued that the dollar is "persistently over-valued" from a trade perspective. "Sweeping tariffs and a shift away from strong dollar policy" could fundamentally reshape the global trade and financial systems. If a weaker exchange rate is the Trump administration's goal, it is on the right track, with the greenback down nearly 10% this year on the back of growing concerns over Washington's fiscal trajectory and policy credibility, as well as the end of "U.S. exceptionalism" and the "safe haven" status of Treasuries. But it is good to remember that a 15% fall in the dollar during Trump's first term had no impact on the trade deficit, which remained between 2.5% and 3.0% of GDP until the pandemic. Making a dent in the U.S. deficit will therefore require a much bigger move. Reducing the trade deficit will be a challenge, eliminating it without a recession, a historic feat. The United States has run a persistent deficit for the past half-century, as insatiable consumer demand has sucked in goods from around the world and voracious appetite for U.S. assets from overseas has kept capital flowing stateside. The only exception was in the third quarter of 1980, when the U.S. posted a slender trade surplus of 0.2% of GDP, and trade with the rest of the world almost briefly balanced in 1982 and 1991-92. But these periods all coincided with - or were the result of - sharp slowdowns in U.S. economic activity that ultimately ended in recession. As growth shrank, import demand slumped and the trade gap narrowed. The dollar only played a significant role in one of them. In 1987, the trade gap was a then-record 3.1% of GDP. But it had almost disappeared by the early 1990s, largely because of the dollar's 50% devaluation from 1985-87, its biggest-ever depreciation. That three-year decline was accelerated by the Plaza Accord in September 1985, a coordinated response between the world's economic powers to weaken the dollar following its parabolic rise in the first half of the 1980s. But that does not mean large depreciations always coincide with reductions in the trade deficit. The dollar's second-largest decline was a 40% fall between 2002 and mid-2008, just before Lehman Brothers collapsed. But the U.S. trade deficit actually widened throughout most of that period, peaking at a record 6% of GDP in 2005. While it had shrunk by more than three percentage points by 2009, that was due more to plunging imports during the Great Recession than the exchange rate. These two episodes of deep, protracted dollar depreciation stand out because over the past 50 years, the dollar index has only had two other declines exceeding 20%, in 1977-78 and the early 1990s, and a few other slides of 15-20%. None of these had any discernible impact on the U.S. trade balance. The U.S. administration is correct that the dollar is historically strong today by several broad measures. Given that Trump and Treasury Secretary Scott Bessent seem intent on rebalancing global trade, pressure on the greenback looks unlikely to lift any time soon. But how much would the dollar have to fall to whittle away the yawning trade deficit, which last year totaled $918 billion, or 3.1% of GDP? Hedge fund manager Andreas Steno Larsen reckons a 20%-25% depreciation over the next two years would see the deficit "vanish," while Deutsche Bank's Peter Hooper thinks a 20%-30% depreciation could be enough to "eventually" narrow the deficit by about 3% of GDP. "This means that a significant reversal of the roughly 40% appreciation of the dollar in real (price-adjusted) terms against a broad set of currencies since 2010 could be sufficient to get the current deficit back to a zero balance," Hooper wrote last week. History suggests this may be challenging without a severe economic slowdown. But that's a risk the administration seems prepared to accept. What could move markets tomorrow? Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
News.com.au
26-05-2025
- Business
- News.com.au
Markets ‘celebrate' after Donald Trump delayed 50 per cent EU tariffs
There's been a 'celebration' from investors globally following 'something of a reprieve' on the tariff front, according to CommSec's Tom Piotrowski. 'The US administration has delayed the imposition of tariffs on EU imports by a month,' he told Sky News Australia. 'That's been celebrated in Europe in particular – you saw the German market rally by 1.7 per cent.'
Irish Times
17-05-2025
- Business
- Irish Times
Trump's tariff retreat lights a fire under markets
Blink, and you might have missed the market rally. The S&P 500 has surged over 20 per cent from its April low, erasing its losses for 2025. The Nasdaq is up nearly 30 per cent in just a few weeks. Too fast? Possibly. Despite Donald Trump 's tariff U-turn, US tariffs remain at their highest level since 1934. Recession odds on prediction market Polymarket are down, but still elevated at around 40 per cent. Beyond tech, earnings are wobbling, with first-quarter strength largely concentrated in mega-cap stocks like Alphabet, Amazon, Apple, Meta and Microsoft. However, this rally doesn't feel like a mere bear market bounce. The Carson Group's Ryan Detrick notes there have been only three years – 1982, 2009, 2020, all major market bottoms – when stocks turned positive after clawing back from such steep losses. A majority of S&P 500 stocks have also hit a 20-day high, a rare breadth thrust that usually signals durable upside (stocks have been higher a year later in 29 of the last 30 instances). READ MORE The current strength reflects enormous relief that Trump still sees the stock market as an important scorecard. Trump realised he was 'toying around with liquid nitroglycerine and it was time to back off', says market strategist Ed Yardeni. 'The markets threw a tantrum, and got what they wanted.' Even if stocks falter again, this surge is a reminder: nervous investors can't wait for uncertainty to lift before getting back into stocks. As CFRA strategist Sam Stovall notes: 'If 0 is knowing nothing and 10 is knowing everything, Wall Street nibbles at three and does full-blown buying at five.'
Yahoo
16-05-2025
- Business
- Yahoo
Jim Cramer on AllianceBernstein Holding L.P. (AB): ‘Very Well-run Company'
We recently published an article titled In this article, we are going to take a look at where AllianceBernstein Holding L.P. (NYSE:AB) stands against the other stocks Jim Cramer recently talked about. During the most recent episode of Mad Money, which aired on Monday, the 12th of May, Jim Cramer discussed the recent market rally and encouraged his viewers to stay invested. He also emphasized the importance of earnings, saying: 'Earnings matter again, okay? That's what happened last night when the United States and China reached an agreement, however temporary, to hold off trade armageddon. The rollback of the exorbitant tariffs to much more reasonable levels caused the stock market to explode.' READ ALSO: AND Although Cramer was happy about the market's recovery, he reminded his viewers that the S&P 500 is still flat on a year-to-date basis and discussed how other regions are doing: 'Now don't get me wrong, I'm glad it happened, but I just spent a week in Europe, and it is stunning how much better the markets are doing over there.' His final reminder was for his viewers to just stay invested in the market and avoid trying to time the market, saying: 'Bottom line: It's better to stay in, stay on, and let her ride than to try to pick the perfect moment to trade in and out and in and out of the stock market. By the way, that's not much of a strategy. It's more of a game of chicken where there are no winners, just losers who think they are smarter than the average bear.' For this article, we compiled a list of 10 stocks that were discussed by Jim Cramer during the Mad Money episode that aired on the 13th of May 2024. We then calculated their performance for the past 12 months, until May 13th, 2025, market close. We have also included the hedge fund sentiment for the stocks, which we sourced from Insider Monkey's Q4 2024 database of over 900 hedge funds. The stocks are listed in the order that Cramer mentioned them. Please note that this article mentions Jim Cramer's previous opinions and may not account for any changes to his opinions regarding the stocks that are mentioned. It is primarily an examination of how his previously provided opinions have panned out. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). A close-up of a portfolio manager discussing financial strategies with a client.A caller was looking to boost yield and asked about AllianceBernstein Holding L.P. (NYSE:AB) as a potential income and appreciation play back then. Cramer expressed support for the idea at the time: "Very well-run company. Always surprised that it is as inexpensive as it is — which is why you've got that big yield. So I do support that idea." The stock rewarded that support, climbing 25.30% over the past year. AllianceBernstein Holding L.P. (NYSE:AB) is a global investment management firm providing research and diversified asset management services to institutional and retail clients. Overall AB ranks 3rd on our list of the stocks Jim Cramer recently discussed. While we acknowledge the potential of AB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than AB but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
Entrepreneur
14-05-2025
- Business
- Entrepreneur
3 Unconventional Stock Picks After the Trade War Détente
With the US-China trade war cooling, markets are rallying. Here are 3 strategies to capitalize on this new dynamic — and 3 stocks to watch right now. This story originally appeared on WallStreetZen Financial markets are buoyant following a détente in the trade war between the U.S. and China. The S&P 500 has now clawed back more than half of its losses from its more than 20% decline between mid-February and early-April. Here's a more detailed market update. The price action is reminiscent of previous V-shaped rallies that took stock markets to new highs. The most recent instances were the post-COVID rally in 2020 and December 2018 following President Trump's first trade war with China. In today's newsletter, I want to discuss how the market is mostly reverting to conditions that were intact prior to the trade war, while noting some important changes in the investing landscape. Then, I will discuss 3 picks to take advantage of these developments. In many ways, the world is returning back to the pre-tariff status quo. But, there are some major differences: Tariffs are now effectively at 30% on Chinese imports and 10% for the rest of the world. It's equivalent to throwing sand in the gears of the global economy which will have long-term effects rather than short-term seizures and disruptions. Scott Bessent has won the internal battle among economic policymakers in the Trump White House. This camp views tariffs as more of a negotiating tool rather than a way to reorder the global economy. Oil prices are lower, while gold prices are higher . International stocks and bonds are outperforming U.S. stocks and bonds. Looking ahead, the US government's fiscal situation and negotiations around President Trump's tax cuts will become the temporary focus of markets, assuming that the 90-day pause results in progress towards trade deals. Below are 3 opportunities that investors should consider in this environment: Chinese Stocks: Appreciate the Resilience It's instructive that both China and the US blinked following a month of aggressive posturing and threats. Both adversaries realized that they have more to lose than to gain with tariffs at such steep levels that it's effectively an embargo. It's a major catalyst for Chinese stocks as it neutralizes a source of uncertainty. Chinese stocks are also attractive from a fundamental perspective. According to David Tepper, the CEO of Appaloosa Management, China offers undervaluation combined with stocks offering double-digit growth. He noted that "When China wants to boost their stock market, the government will stop at nothing." China is also looking to boost domestic consumption to offset negative impacts from tariffs. Therefore, investors should consider stocks that would benefit from an increase in consumer spending and borrowing. Buy Momentum Stocks: Ride the Rally Navigating this market requires discipline. Following one's emotions and/or being stubborn can compromise long-term performance. Having a plan and leveraging proven and high-powered, quantitative systems like the Zen Ratings, is essential to taking advantage of opportunities created in these markets. Momentum stocks are an example of a unique opportunity in this type of market. This is appropriate for those who believe that the market is in the midst of a V-shaped rally. Momentum strategies work very well in these types of markets. Many fund managers have been shaken out during the selloff and are underinvested or positioned short. This means there is more fuel on the sidelines to power prices higher as they look to keep up with their benchmarks. You can use this screen to identify the best momentum stocks among Strong-Buy rated stocks. Interest Rates: Higher for Even Longer Another consequence of trade tensions dissipating is that recession risk is reduced as well. This was reflected in Treasury yields moving higher following Sunday's announcement. Currently, the yield on the 10-year is at 4.45%, compared to a low of 3.9% in early-April soon after "Liberation Day' when trade fears peaked. Beyond lower tariffs, yields should continue to rise as the Trump tax cuts and Republican spending bill are projected to be larger than expected, while spending cuts are much smaller than initially expected. Further, these measures are expected to be paired with the debt ceiling increase to avoid a government shutdown. This matters, because it means that Republicans are more likely to go along with the bill, even if they have reservations, increasing the likelihood of passage. Overall, deficits are likely to increase. Tariffs will contribute to inflationary pressures. Thus, yields are likely to keep trending higher. 3 Top Stocks To Watch These 3 stocks are well-positioned to capitalize on these trends: 1. FinVolution Group ( FINV ) FinVolution Group (FINV) is a fintech platform that connects borrowers and lenders in China and Southeast Asia. It utilizes AI to make credit assessments and manage risk to serve underserved markets. As of February 2025, the company had 150 million users. Last year, it processed over $25 billion in loan transactions, an 18% increase from the previous year. For investors, FINV offers low valuation and impressive growth. It has a forward P/E of 5.2, and analysts forecast 21% growth in earnings this year. It's also expanding into markets like Indonesia and Philippines which it sees as key to future growth. FINV is rated an overall Strong Buy (A) rating according to the Zen Ratings. Strong buy rated stocks have produced an average annual return of 32.5% since 2003, outpacing the S&P 500's average 10.5% annual gain. Out of a universe of over 4,500 stocks, FINV ranks in the top 3% for Momentum. This is consistent with the stock's recent outperformance in addition to its turnaround in earnings and improvement in margins. 2. LexinFintech Holdings ( LX ) LexinFintech Holdings (LX) is another Chinese fintech stock. While FINV draws comparison to Upstart Holdings (UPST), LX is compared to Affirm (AFRM) which offers installment loans and targets a younger demographic. Currently, LX has over 100 million registered users and is able to approve loans in minutes, utilizing big data and AI to assess creditworthiness. Last year, the company originated $15 billion in loans, a 22% increase from the previous year. The company has a P/E of 4.1, and analysts forecast earnings growth of 41% this year. Despite lending to riskier borrowers, the company had a low default rate of 3% in 2025. The company also has a decent margin of safety given $500 million in cash, equivalent to 40% of its market cap, and a low debt-to-equity ratio. LexinFintech is in the top 1% of all stocks in the Zen Ratings Universe due to its growth prospects, strong financial health, low valuation, and improving margins. The company also has strong Component Grades including an A for Momentum and a B for Growth. Click here to see more. 3. Prudential PLC ( PUK ) Prudential PLC (PUK) is a leading insurance and asset management provider with over 50 million customers across 24 markets in Asia and Africa. The company generates revenue through life insurance premiums, annuities, and investment management fees, with $1.4 trillion in assets under management as of 2024. PUK is a strong investment due to its attractive valuation and growth catalysts. It trades at a forward P/E of 9.9, significantly below the S&P 500's forward P/E of 22 and offers exposure to rising rates and international markets. Its strong position is underscored by the company's 13% dividend hike and increase to its share buyback program. Prudential is rated a Buy (B) by the Zen Ratings due to this combination of safety, value, and growth. B-rated stocks have posted an average annual performance of 19.9%. The stock ranks in the top 5% for Momentum and top 10% for Growth. The latter is reflected in Wall Street analysts forecasting 21% annual earnings growth for the next 3 years. Conclusion The stock market has been on a roller coaster ride over the last 3 months. But, the ride seems to be ending — for now. It appears we're entering a new regime that requires a fresh playbook — adding high-quality stocks like the ones mentioned above are a powerful way to uplevel your strategy. What to Do Next?
