📊INDICES: it was a good month
📊The ISM report in the services sector was positive about the recession, as was the growth of private capital (reflected in technology investments). Thus, the month (July) turned out to be very positive for the global stock market.
It is historically confirmed that the market needs ~19 months to recover from a bear market (we are talking about the S&P500 index). If the downward movement is not more than 30%, then the market demonstrates a more intensive recovery. For example, in 1982 it took 3 months for the index to fully recover; in 1990 4 months; in 1998 3 months; in 2011 4 months; in 2018 4 months; and in 2020 5 months. The S&P500 is down double digits this year.
Over the month, the S&P500 index added 8.44%, the Dow Jones industrial index +6.06%, and the NASDAQ Composite +11.41%. It should be noted that this was the largest monthly increase in stock indices since November 2020 and the largest for its high-tech market since April 2020.
📈Other indices showed the following results:
🔵IBEX 35 +0.71%
🔵Dax +5.48%
🔵FTSE 100 +3.54%
🔵CAC 40 +8.87%,
🔵FTSE MIB +5.22%,
🔵Euro Stoxx 50 +7.33%
🔵Nikkei +5.34%
The results came as Fed Chairman Jerome Powell suggested that the pace of interest rate hikes could slow down earlier than expected. In addition, the reporting season as a whole was better than expected, with nearly 75% of S&P 500 companies reporting better-than-expected results.
📉If we consider the annual current result by indices, then it all looks something like this:
🔵FTSE +0,53%
🔴Nikkei -3,44%
🔴Dow Jones -10,18%
🔴Euro Stoxx 50 -13,34%
🔴S&P500 -13,87%
🔴DAX -15,11%
🔴CAC -15,11%
🔴CSI -15,59%
🔴NASDAQ -21,46%
🤔Where to expect indices by the end of 2022❓
The dollar is up nearly 11% year-to-date, helped by the Fed's hawkish moves and rising geopolitical tensions that have boosted the dollar's safe-haven appeal. A survey of mutual fund managers conducted by the Bank of America shows that dollar bullish positions are at their highest level in seven years. A strong dollar affects emerging market currencies and forces central banks around the world to raise rates even at the cost of a recession. At the same time, as the indices grew, we could observe how the DXY index weakened. Toward the end of 2022, the US dollar is expected to reassert itself and its recent highs. This fact will affect the indices negatively.
Recent weak US economic data has fueled optimism that the Federal Reserve may be less aggressive in raising interest rates at upcoming meetings. This rhetoric is ambiguous, so one should not strongly lean towards the fact that the Fed has finished raising.
Most likely, in the aggregate of the above, the indices will still grow (by, that is, potential). However, by the end of 2022, one need to be ready for another downward movement in the market.
It is historically confirmed that the market needs ~19 months to recover from a bear market (we are talking about the S&P500 index). If the downward movement is not more than 30%, then the market demonstrates a more intensive recovery. For example, in 1982 it took 3 months for the index to fully recover; in 1990 4 months; in 1998 3 months; in 2011 4 months; in 2018 4 months; and in 2020 5 months. The S&P500 is down double digits this year.
Over the month, the S&P500 index added 8.44%, the Dow Jones industrial index +6.06%, and the NASDAQ Composite +11.41%. It should be noted that this was the largest monthly increase in stock indices since November 2020 and the largest for its high-tech market since April 2020.
📈Other indices showed the following results:
🔵IBEX 35 +0.71%
🔵Dax +5.48%
🔵FTSE 100 +3.54%
🔵CAC 40 +8.87%,
🔵FTSE MIB +5.22%,
🔵Euro Stoxx 50 +7.33%
🔵Nikkei +5.34%
The results came as Fed Chairman Jerome Powell suggested that the pace of interest rate hikes could slow down earlier than expected. In addition, the reporting season as a whole was better than expected, with nearly 75% of S&P 500 companies reporting better-than-expected results.
📉If we consider the annual current result by indices, then it all looks something like this:
🔵FTSE +0,53%
🔴Nikkei -3,44%
🔴Dow Jones -10,18%
🔴Euro Stoxx 50 -13,34%
🔴S&P500 -13,87%
🔴DAX -15,11%
🔴CAC -15,11%
🔴CSI -15,59%
🔴NASDAQ -21,46%
🤔Where to expect indices by the end of 2022❓
The dollar is up nearly 11% year-to-date, helped by the Fed's hawkish moves and rising geopolitical tensions that have boosted the dollar's safe-haven appeal. A survey of mutual fund managers conducted by the Bank of America shows that dollar bullish positions are at their highest level in seven years. A strong dollar affects emerging market currencies and forces central banks around the world to raise rates even at the cost of a recession. At the same time, as the indices grew, we could observe how the DXY index weakened. Toward the end of 2022, the US dollar is expected to reassert itself and its recent highs. This fact will affect the indices negatively.
Recent weak US economic data has fueled optimism that the Federal Reserve may be less aggressive in raising interest rates at upcoming meetings. This rhetoric is ambiguous, so one should not strongly lean towards the fact that the Fed has finished raising.
Most likely, in the aggregate of the above, the indices will still grow (by, that is, potential). However, by the end of 2022, one need to be ready for another downward movement in the market.
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