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B. G., Opalesque Geneva: Recent economic data have been strong across the world boosted by China reopening from covid, falling gas prices in Europe and strong numbers for employment and consumer spending in the US, says Steven Bell, chief economist, EMEA, at Columbia Threadneedle, a large asset manager.
Stronger economies should mean better earnings for companies and higher stock prices, but February is shaping up to be a weak month for US equities and emerging markets have fared even worse with the MSCI index underperforming by close to 9% since its relative peak in mid-January.
The S&P 500, the best single gauge of large-cap US equities, is up 3.6% YTD after losing 2.4% in February (-7.6% in the last year). The S&P MidCap 400 is up 7% YTD after losing 1.8% in February (-0.6% in the last year). And the S&P SmallCap 600 is up 8% YTD after going down 1.2% in February (-3.% in the last year).
So what's going on?
On the one hand, stronger US data means more tightening by the Federal Reserve and higher interest rates are bad for equities, Bell says. Moreover, the read across from a stronger economy to stronger earnings may be working at present, but the tight labour market means margins are under press...................... To view our full article Click here
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