Category: Market Outlook

There is a rule of thumb circulating around social media that when the U.S. The Federal Reserve starts hiking interest rates, it is in general, bad for the stock market.

In Economics 101, what is often taught in school is that if Central Banks want to curtail economic growth, one classic technique will be to increase interest rates. By increasing interest rates, the cost of borrowing for companies will increase, thereby making it more restrictive for companies to grow. Hence, the logic is that when companies are restricted, this surely is bad for listed companies in the stock market!

2021 was truly a year of great rotational confusion. The way money flowed across various themes and sectors in 2021, would have sent the most flexible minded trader and investor into a tailspin headache!

It’s the time of the year where wall street analysts are busy trying to offer their two cents worth in terms of predicting what 2022 might bring for the US stock market.

Many institutional investors, hedge funds and professional traders rely on their market outlooks to help them navigate and plan their 2022 trading and investing roadmaps.

The Quantitative Easing (QE) cycle that began following the Covid pandemic has been truly unprecedented.

Between March 2020 and February 2021, in a matter of only 11 months, many high flying growth stocks have quadrupled or grown by multiples, especially those that had benefited from the Covid-19 digitalisation acceleration process

There is a new Covid Variant that is making waves not only in mainstream media, but also the stock market.

This new variant is so ‘deadly’ it caused the Dow to tumble 900 points on the worst ever Black Friday in history since 1931. In reality this variant is so concerning to the stock market because it has created a lot of anxious chatter among medical professionals regarding a Covid 19 variant before.

There is much to worry about these days – glaring challenges, huge in magnitude, and intertwined throughout the global economy in so many ways imaginable.

Yet the strength of the US stock market seems invincible and nothing is able to keep it down for long.

September 2021 experienced some volatility throughout the month. For a consecutive 3 weeks, we saw a temporary maximum drawdown (peak to trough) move from 4545.85 to 4305.91 (-5.27%) due to seasonal weakness and more importantly the contagion risks associated with Evergrande’s financial troubles (we will cover this further in this article).

In the month of August 2021, the S&P 500 showed continued strength by gaining 106.78 points (+1.3%) from 4415.9 to 4522.68.

August 2021 experienced some volatility in the 3rd week, which saw a temporary drawdown (peak to trough) move from 4480.26 to 4367.73 (-2.51%) due to the Covid delta variant spread around the world, and also China tech stocks experiencing further selldown due to additional government crackdowns.

However, that bout of selldown was quickly reversed when markets took the opportunity to once again buy the dip.

In the month of July 2021, the S&P 500 showed continued strength by gaining 91 points (+2.1%) from 4304.1 to 4395.26.

July 2021 was also a volatile month, which saw a temporary drawdown (peak to trough) move from 4395 to 4235 (-3.63%) due to higher than expected inflation results and also the Covid delta variant spread around the world.

There are 11 sectors making up the S&P 500. It appears for the month of June 2021, the 1.9% S&P 500 gain has been mostly contributed by the Information and Technology, Health Care and Communication Services sectors due to their heavy weightage. Collectively, these 3 sectors make up more than half of the S&P 500.