Bassanese Bites: Value rotation – June 01 2020
Risk-on sentiment prevailed across global markets last week – so much so that even previously neglected sectors such as financials began to attract interest. Key drivers were upbeat comments from JP Morgan CEO Jamie Dimon, and the fact Trump failed to follow through on threats to sanction China over Hong Kong. Bigger picture, equities are still basking in ‘re-opening’ hopes, supported by the view the Fed will only pump prime further if need be. In essence, good news is good news – and bad news is good news also! Notably, long-term bonds yields thus far are staying down – either due to central bank support and/or lingering scepticism of the risk-on rally within the fixed-income market.
Technically, the S&P 500 consolidated after its recent range breakout, and also pushed through the closely-watched 200-day moving average. Interest now is whether the S&P 500 can also push through the early March consolidation zone around 3,100 (the only fleeting consolidation period during the sharp sell-off!). If the S&P can sail through this zone, the next key target – unbelievable as that sounds – is the 3,386 all-time high on 19 February.