The global stock rally that started on Tuesday extended into Wednesday morning and analysts have reason to believe that the bullish run may still have some life left. Several noteworthy factors have made stocks continually attractive, including low bond yields and a strong earnings season. CNBC’s Jim Cramer also noted that approximately 40 percent of stocks in the S&P 500 index are down 10 percent from their pre-pullback highs, signaling that we could be seeing a correction, which creates excellent buying opportunities. Ric Spooner, chief market analyst for CMC Markets in Sydney agrees.“The return of bargain hunters after a shallow correction in US markets again demonstrates that investors are reluctant to reduce exposure to equity markets given low bond yields, solid profit growth and a lower US dollar,” he noted.
The S&P 500 gained 1 percent on Tuesday and the Dow Jones Industrial Average rose 0.9 percent. The Nasdaq was up 1.4 percent on Tuesday owing largely to a rally in the technology sector. European stocks also gained overnight owing in part to the weaker euro.
Though the Shanghai composite was trading flat as of 10:52 a.m. HK/SIN, South Korea’s Kospi was up 0.07 percent and MSCI’s broadest index of shares outside Japan was up 0.1 percent. Japan’s Nikkei 225 was 0.8 percent higher in early trade.
Currency Movements
The dollar continued to strengthen against its primary trading partners on Wednesday, gaining 0.09 percent against the yen to trade at 109.64 yen. The euro was down marginally against the greenback as well, trading at $1.1758. Support for the dollar comes as U.S. Treasury yields pulled away from two-month lows and risk appetites increased.
On Wednesday afternoon Fed Chair Janet Yellen will be offering a statement from Jackson Hole, as will European Central Bank President Mario Draghi. Neither is expected to announce any noteworthy policy messages.
