Singapore Sales Trader
June was the second best performing month for S&P 500 since President Trump won the election in November 2016 as the S&P 500 index recorded a 6.83% monthly return, rebounding much of its losses in May (-6.48%). This draws similarities with the 2018 December drop of 9.11% and the subsequent recovery in January as the Fed tilted dovish in a bid to support and stabilize the capital market and provide some cushion as we enter into the late business cycle.
Despite the massive rally in the US indices into all time highs, close to 38% of the compositions are still struggling to trade close to their 52 weeks high and trailing against the percentage difference between current price and the highest price reached in the past 52 weeks. While that means that the remaining 62% still beat the average, one would have thought that the average percentage difference between current price and the highest price reached in the past 52 weeks will be a lot tighter especially with the S&P 500 hitting the once elusive 3,000 points during this week.
Since 2018, the relentless ascent in 2018 was met with multiple corrections with an equally ferocious rebound. On hindsight, we could probably identify 5 such periods since 2018 which the S&P 500 formed a local peak and trough, identified by the picture below with different colours identifying the various temporary peaks and troughs. As the S&P500 bounced to 3,000 points this month , we look to highlight some of the lesser known components in the S&P 500 that have been outperforming the average returns in the S&P 500 in both the down period and up-period that are identified. These are the unsung drivers in the constituents with a short history of being more resilient to market’s shock while also having the legs to outperform on market’s ascent.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
