1. Wall Street Takes A Breath
Despite yesterday’s Boeing fiasco, the S&P 500 managed to post its biggest increase since January with the 1.04% rally being led by some significant momentum in the tech sector.
Not even a 12% drop in Boeing’s share price could water down the effects of surges in Apple and Nvidia, which drove Wall Street higher on the day. Apple bumped up 1.96% after an analyst upgrade, while Nvidia soared 9.06% thanks to its plans to acquire Israeli chip-maker, Mellanox.
The rally gave markets some much-needed respite from their woeful performance last week, which saw five consecutively lower closes for the S&P. A number of red flags have been weighing on stock performance for the past two weeks, such as weaker US jobs and housing data, coupled with more global growth concerns that have proven to be a thorn in the index’s side.
The remainder of this week will be an important measure of the strength of 2019’s incredible bull market. If major indexes cannot conclusively re-establish a strong rally and more poor fundamental news comes forward, the loss of momentum may become more deeply entrenched and harder to break to the upside.
Investors are holding onto hopes that the next round of trade talks will provide the oomph needed to convince the bears that the rally still has some way to go. Tick tock.
2. Brexit Turnaround Boosts Markets
The Pound jumped up a few notches and Asian markets opened in the green this morning on renewed optimism for Brexit after the EU Commission agreed to a number of changes in Theresa May’s proposed deal.
The last minute assurances given by Jean-Claude Juncker boosted hopes of a plan getting through today’s parliamentary vote, sending the Pound into orbit. Every small move away from a no-deal catastrophe has a sizable impact on the value of the currency and investor confidence in the region, making even the smallest wins important for stability.
The Pound has appreciated over 1.5% in the space of two days and a positive outcome on today’s vote could see a heck of a lot more upside.This news, along with an increased likelihood of stimulus measures in China, also helped support a stronger open in Asia this morning with the Chinese CSI, Japanese Nikkei and Australian ASX indexes rising 1.6%, 1.9% and 0.4% respectively.
The vote today will be a telling one with a sizeable impact for global markets. While markets may be upbeat this morning about the EU’s concessions, any further disappointments could send the UK back to square one….Let’s hope the Brits can keep the doom and gloom at bay!
Today we are watching…
1. Apple (#aapl)
Institutions are finally changing their ratings of beaten down tech giant, Apple. Bank of America shifted its outlook to positive yesterday on the grounds that the stock was undervalued and poised for growth, sending investors flooding back into the stock. Apple gained 2% during the session, but may be the source of some aggressive buying in the coming weeks as investors return to their old favourite. Keep an eye on this one.
2. Valero Energy (#valero)
US-based energy company, Valero, was among the top performers yesterday, rising 3.7% during the session. Despite trading over 40% below its 52 week high, analysts are seeing fundamental value in the company at these discounted prices. The company’s sales revenue has been ticking up consistently and both gross and net margins have grown +4.82% and +2.70% respectively. Valero is definitely worth watching.