The markets never go up in a straight line and after weeks of enthusiasm driven by bullish statements from the Federal Reserve and strong fourth quarter 2013 earnings from the likes of Microsoft, there has been an inevitable mild sell off. The S&P 500 lost 18 points yesterday or 0.9% to register a 1.1% decline for the year to date with the Dow Industrials falling 176 points to 16,197. Emerging markets fell to low not seen since September 2013. The big question is whether this is the start of a big sell off. Unlikely I would think given the macro economic optimism.
A surprise contraction in Chinese manufacturing as well as worries about the liquidity of the financial system spooked investors and gave them a good excuse to take profits after last years amazing run. With equities being sold off today in Europe and Asia after the falls in the U.S. yesterday, investors have bid up gold to $1260.
With record high margin debt levels on the New York Stock exchange and the Fed looking to further taper quantitative easing sooner rather than later some of the froth is starting to fade. Still as I said in a piece earlier in the new year, there are plenty of reasons for optimism given the strength of the European and American economies this year. A few sells off are much needed to offer up buying opportunities.
Oil stocks in particular look might cheap right now in the FTSE 250 and AIM space, particularly after news today from Cairn Energy that the Indian authorities were reinvestigation their tax affairs from 7 years ago in connection with their Indian stock market listing and sale of assets to Vedanta resources. The shares are down nearly 5% with others like Ophir Energy also falling their wake.
Contrarian Investor UK
by contrarianuk
A sensible move down in the market
Jan 24, 2014 at 10:54 am in Market Commentary by contrarianuk
A surprise contraction in Chinese manufacturing as well as worries about the liquidity of the financial system spooked investors and gave them a good excuse to take profits after last years amazing run. With equities being sold off today in Europe and Asia after the falls in the U.S. yesterday, investors have bid up gold to $1260.
With record high margin debt levels on the New York Stock exchange and the Fed looking to further taper quantitative easing sooner rather than later some of the froth is starting to fade. Still as I said in a piece earlier in the new year, there are plenty of reasons for optimism given the strength of the European and American economies this year. A few sells off are much needed to offer up buying opportunities.
Oil stocks in particular look might cheap right now in the FTSE 250 and AIM space, particularly after news today from Cairn Energy that the Indian authorities were reinvestigation their tax affairs from 7 years ago in connection with their Indian stock market listing and sale of assets to Vedanta resources. The shares are down nearly 5% with others like Ophir Energy also falling their wake.
Contrarian Investor UK