Global equities are back in vogue

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It is the last trading day of the week, and it has been a good week for our markets. Yesterday it did become a bit soft, both on large caps and midcaps but we are still within shouting distance of 11,500, and that is a pretty good level to be at.

 

Global markets are stable and crude has cooled down to USD 70, and that is something to play around with this morning as well. All in all, the mood shouldn't be too bad as we head into the last trading day of the week and who knows, maybe we can bounce back from yesterday's pause or even if it is another pause, I don't think people will be too perturbed.

 

Traders in comfort zone

 

It has been a good week so far. It looked like yesterday was just a breather, and today if we just pull back a bit and close in a bit of green that would be good. Even if we were to have another day of pause, I don't think traders will be thrown off too much because they are sitting on gains right now, both on largecaps and midcaps, and it is a comfortable feeling. We don't want to be shaken up too much on the last trading day because then we will go into the weekend not on a very good note, and that is not a good sign. So even if it is a flat to positive kind of market it will be fine, because people are sitting on gains after a very long time. So what we are looking forward to is the completion of two good weeks on the trot on a closing basis today, and hopefully that will be delivered.

 

Emerging Markets

 

The US was flat overnight. The Asian emerging markets are not too bad, but also a bit flattish; Taiwan, Kospi were absolutely flat and so is the Hang Seng. Straits Times was a bit better and Nikkei a bit better than that. So these are the kind of gains one is playing with this morning.

 

The other emerging markets like Russian and Brazil were a bit quiet, just about a third of a percent down (-0.3%), Mexico was okay and Chile was flat, so there were no cues from there.

 

Interest in global equities building up

 

Global equities are coming back in vogue right now. People across the world seem to be feeling much better about equities now because a few of the strong clouds may just be disappearing, atleast for the moment. The call is still out on whether this is the end of the interest rate hike cycle or not, whether there is really an inflation scare or is it just a temporary risk pattern of inflation. Will they raise their ugly heads later in the year?

 

We don't know the answer. But for the moment, I think the fear is because of inflation, but we can live with that. The bigger fear is the growth slow down. That seems to be the consensus, which is building up, which is why one can see much more interest in global equities over the last few days.

 

Crude: a wild card

 

I think the wild card here is crude. You had a significant cool down, in percentage terms from USD 78 to USD 70, and that is a major cool down; you are talking about a 12-13% cool down.

 

In the context of the stock market we would have seen a 1,200-1,300 point fall. That's the kind of fall you had in crude. I think for the first time in many weeks and months some of the crude watchers are saying that maybe crude has hit a double top and maybe we won't see USD 78 in a hurry. But these are all probabilities. One hurricane can change things; one bomb blast somewhere can change anything.

 

So that market too is a bit edgy, but even so, I think people are now thinking that crude might have cooled down for sometime now. So if you put all these together, crude cooling down to USD 70, the fact is that maybe in September things will not move once again on the rate front.

 

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