While only last week many global investors saw the US stock market as leader lower, mainly on the back of weak economic releases, in seven short days sentiment has changed dramatically. After the US payrolls release at the beginning of the month, many investors now see growth as solid and as a result are buying US and other stocks in North America and in Asia. The US S&P 500 has broken above that key 2,950 resistance level and is pushing higher, while the Japanese Nikkei 225 index has closed above 22,300 – Japanese stocks are impressing many. But what is most interesting is that each time there is negative news out of Hong Kong, US and Japanese stocks continue higher.
This might be a new trend because historically, geopolitical shocks like the Hong Kong protests trigger aggressive selling and naturally, stock markets move lower. But now, with the US China Trade Talks moving sideways and the protests still raging in Hong Kong, there is only “good news” in a possible improved Brexit decision. A Brexit deal would be a game changer and of course would give global equity markets a boost. So currently, the US, Japan and other equity markets are performing well but the most recent market from Moody`s chief economist is that there will be a high chance of a global recession in the next 12 to 18 months.