Marketmind: Melt up?

A look at the day ahead from Sujata Rao.

Is this a melt-up?

As confidence grows that the world’s biggest central banks are in no hurry for raising interest rates despite progress on the jobs and post-COVID reopening fronts, stock markets have powered to new record highs. A stronger S&P 500 close on Tuesday would see it notching its longest winning streak since 2004.

Citi notes too the hefty increases in “long” futures positions on the S&P 500 as well as the STOXX indexes.

So much for all the angst about a 5% decline in Tesla.

The rally seems to have paused for breath however, possibly awaiting U.S. consumer inflation figures due on Wednesday and factory gate prices later on Tuesday. Germany’s ZEW index will also reveal how business confidence is shaping up. So world stocks are off record peaks and futures for Wall Street and European bourse are pointing south.

There still seems to be some trepidation : Only 49% of JPMorgan clients surveyed weekly by the bank, apparently plan to increase equity exposure and are 50:50 split on whether markets or central banks are right about rate lift-off timing.

Yet with inflation-adjusted yields showing no sign of budging from deeply negative territory, the equity juggernaut looks unstoppable. Look here too for why the crypto market cap has swelled to over $3 trillion, with Bitcoin and Ether up nearly 70% against the dollar since the start of October.

Listen out later in the day for Fed and ECB speakers; Fed chair Jerome Powell and ECB president Christine Lagarde will both be on the wires.

Key developments that should provide more direction to markets on Tuesday:

-China state council think-tank met developers, banks, says source, as debt woes mount read more

-PayPal Holdings Inc beat Wall Street estimates for quarterly profit nL4N2RZ49S

-UK BRC retail sales

-Germany trade balance/ZEW

-ECB policymaker Klaas Knot speaks – 1150 GMT; ECB President Christine Lagarde speaks – 1300 GMT; ECB bank supervisor Andrea Enria 1315 GMT; Tiff Macklem, governor of bank of Canada speaks

-US 10-year note auction

-Emerging markets: Romania, Serbia central banks meet

Europe earnings; Porsche, Tag Immobilien, Persimmon, Direct line insurance, Bayer, Swiss Life,

US earnings: Doordash, Palantir, BionTech

Reporting by Sujata Rao; editing by Saikat Chatterjee

Our Standards: The Thomson Reuters Trust Principles.

Source: https://www.reuters.com/business/melt-up-2021-11-09/