The US is officially in a bull market right now but it really does not feel like it.
The mood among investors this year has been mostly one of frustration as high inflation, the banking crisis, US debt ceiling talks and a slowdown in China have squeezed sentiment.
Yet the news is in and we are definitely in a bullish phase, even if much of the growth came last autumn, rather than in 2023.
Last Thursday, the S&P 500 closed at 4,293.93, a rise of more than 20 per cent since its recent low on October 12, 2022.
So, why do investors seem relatively glum?
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The US stock market may have rallied but nearly all the growth has been driven by a handful of stocks in the technology sector, with little action elsewhere.
Technology titans Apple, Microsoft, Google-owner Alphabet and Amazon are up by about 40 per cent this year while chip maker Nvidia has rocketed 170 per cent, driven by the hot-headed artificial intelligence mania.
Facebook owner Meta and electric car maker Tesla have also been shooting up, making good some of last year's losses.
However, once you remove those seven stocks, the S&P has actually fallen this year, while UK, European and emerging markets are not exactly flying.
So, unless investors have gone big on US tech, they will not be looking at their portfolios and feeling much richer.
However, it is better than we could have expected, given that last year's inflationary scourge is far from defeated.
At the start of 2023, investors were holding their collective breath and waiting for the day when the US Federal Reserve and other global central bankers would “pivot” and start slashing interest rates rather than raising them at record speed.
The optimists assumed that day would have arrived by now, but it keeps getting pushed further back.
Central banks are still raising rates as they battle to suppress inflation, with the Bank of Canada delivering a surprise increase of a quarter of a percentage point to 4.75 per cent last week, hard on the heels of the National Bank of Australia, which lifted rates to an 11-year high of 4.1 per cent.
The Bank of England will surely follow on June 22, lifting rates to 4.75 per cent, with a string of further increases to come as inflation runs rampant.
Rising oil prices following Saudi Arabia’s production cut are not helping either, says Chris Beauchamp, chief market analyst at online trading platform IG.
“The combination of high interest rates and rising oil prices has proved to be dangerous for stocks over the past 18 months,” Mr Beauchamp says.
The US tech stock bounce is starting to look “overextended” and sellers now have the upper hand as buyers retreat, threatening the bull market, he adds.
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Investors are desperately hoping the Fed will hold its funds rate at today’s range of 5 per cent to 5.25 per cent at its next meeting on June 14, the first freeze since it began increasing rates in March last year.
That may only be a temporary pause, though, as US inflation is proving sticky at 4.4 per cent in April, rising to 4.7 per cent when stripped of volatile food and energy prices. That is still more than double the Fed’s 2 per cent target.
Markets have faced a lot of headwinds this year, including February’s banking meltdown and the US debt ceiling crisis.
These have blown over but investors refused to be cheered and are now turning their focus to China, Mr Beauchamp says.
“The boost from the reopening of China’s economy seems to have faded altogether, putting recession fears at front and centre once more.”
Chinese exports fell 7.5 per cent annually in May, which came as a shock following the 8.5 per cent growth registered in April, and a recession looms.
China's current weakness is also weighing heavily on European markets, says Fawad Razaqzada, a market analyst at City Index. “The nation is a big export destination for European companies, from luxury brands to car makers.”
Europe is already in a recession, after revised data show that its economy shrank by 0.1 per cent in the first three months of this year, marking two consecutive quarters of contracting gross domestic product. High energy and food prices and falling consumer demand are to blame.
Monetary policy tightening could also bring the US economy to a grinding halt towards year end, warns Christian Gattiker, head of research at Julius Baer, who has called 2023 the “year of the cool down”.
“The US will likely cool off more than other countries after having been a growth stronghold.”
Emerging markets offer investors the best hopes of decent returns right now as they should expand their growth advantage over developed countries, says Luca Paolini, chief strategist at Pictet Asset Management.
Currently, their GDP is growing 3 per cent a year more than the developed world, and he expects it to hit a 10-year high of 5 per cent, boosting corporate earnings growth.
“We forecast an 11 per cent rise in earnings growth for emerging markets this year, compared with near zero in the developed world,” Mr Paolini says.
The combination of high interest rates and rising oil prices has proved to be dangerous for stocks over the past 18 months
Chris Beauchamp,
chief market analyst at online trading platform IG
Mr Paolini is particularly downbeat about the eurozone and says Pictet is “defensive at a time when developed world companies are struggling to grow earnings in a slowing economy, and are overweight in consumer staples companies and the healthcare sector”.
If the tech rally fades, markets are in danger of losing all sense of direction and we are not even in the dog days of summer yet.
However, investors should not be too glum as things could be worse, says Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“Economies have been proving way more resilient than expected, with the World Bank revising its 2023 growth forecasts upwards from January’s 1.7 per cent to 2.1 per cent,” she says.
The World Bank ruined that by warning that 2024 could be tougher as more of the impact of higher rates is felt and tightening credit conditions show up in lower investment.
“It is now forecasting global growth to come in at 2.4 per cent next year, down from the 2.7 per cent it originally forecast,” Ms Streeter says.
Tech investors who have benefitted from the bull market should relish their good fortune, but those who missed out should think carefully before jumping on the bandwagon at this late stage.
Yet, as today’s weird bull market proves, stock market movements are impossible to second-guess. Sometimes, they are hard to explain, too.
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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Where can I submit a sample?
Volunteers can now submit DNA samples at a number of centres across Abu Dhabi. The programme is open to all ages.
Collection centres in Abu Dhabi include:
- Abu Dhabi National Exhibition Centre (ADNEC)
- Biogenix Labs in Masdar City
- Al Towayya in Al Ain
- NMC Royal Hospital in Khalifa City
- Bareen International Hospital
- NMC Specialty Hospital, Al Ain
- NMC Royal Medical Centre - Abu Dhabi
- NMC Royal Women’s Hospital.
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
Company name: Farmin
Date started: March 2019
Founder: Dr Ali Al Hammadi
Based: Abu Dhabi
Sector: AgriTech
Initial investment: None to date
Partners/Incubators: UAE Space Agency/Krypto Labs
The specs
Engine: 2.0-litre 4-cyl turbo
Power: 247hp at 6,500rpm
Torque: 370Nm from 1,500-3,500rpm
Transmission: 10-speed auto
Fuel consumption: 7.8L/100km
Price: from Dh94,900
On sale: now
Iraq negotiating over Iran sanctions impact
- US sanctions on Iran’s energy industry and exports took effect on Monday, November 5.
- Washington issued formal waivers to eight buyers of Iranian oil, allowing them to continue limited imports. Iraq did not receive a waiver.
- Iraq’s government is cooperating with the US to contain Iranian influence in the country, and increased Iraqi oil production is helping to make up for Iranian crude that sanctions are blocking from markets, US officials say.
- Iraq, the second-biggest producer in the Organization of Petroleum Exporting Countries, pumped last month at a record 4.78 million barrels a day, former Oil Minister Jabbar Al-Luaibi said on Oct. 20. Iraq exported 3.83 million barrels a day last month, according to tanker tracking and data from port agents.
- Iraq has been working to restore production at its northern Kirkuk oil field. Kirkuk could add 200,000 barrels a day of oil to Iraq’s total output, Hook said.
- The country stopped trucking Kirkuk oil to Iran about three weeks ago, in line with U.S. sanctions, according to four people with knowledge of the matter who asked not to be identified because they aren’t allowed to speak to media.
- Oil exports from Iran, OPEC’s third-largest supplier, have slumped since President Donald Trump announced in May that he’d reimpose sanctions. Iran shipped about 1.76 million barrels a day in October out of 3.42 million in total production, data compiled by Bloomberg show.
- Benchmark Brent crude fell 47 cents to $72.70 a barrel in London trading at 7:26 a.m. local time. U.S. West Texas Intermediate was 25 cents lower at $62.85 a barrel in New York. WTI held near the lowest level in seven months as concerns of a tightening market eased after the U.S. granted its waivers to buyers of Iranian crude.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The Equaliser 2
Director Antoine Fuqua
Starring: Denzel Washington, Bill Pullman, Melissa Leo, Ashton Sanders
Three stars
Killing of Qassem Suleimani
UAE currency: the story behind the money in your pockets
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
Important questions to consider
1. Where on the plane does my pet travel?
There are different types of travel available for pets:
- Manifest cargo
- Excess luggage in the hold
- Excess luggage in the cabin
Each option is safe. The feasibility of each option is based on the size and breed of your pet, the airline they are traveling on and country they are travelling to.
2. What is the difference between my pet traveling as manifest cargo or as excess luggage?
If traveling as manifest cargo, your pet is traveling in the front hold of the plane and can travel with or without you being on the same plane. The cost of your pets travel is based on volumetric weight, in other words, the size of their travel crate.
If traveling as excess luggage, your pet will be in the rear hold of the plane and must be traveling under the ticket of a human passenger. The cost of your pets travel is based on the actual (combined) weight of your pet in their crate.
3. What happens when my pet arrives in the country they are traveling to?
As soon as the flight arrives, your pet will be taken from the plane straight to the airport terminal.
If your pet is traveling as excess luggage, they will taken to the oversized luggage area in the arrival hall. Once you clear passport control, you will be able to collect them at the same time as your normal luggage. As you exit the airport via the ‘something to declare’ customs channel you will be asked to present your pets travel paperwork to the customs official and / or the vet on duty.
If your pet is traveling as manifest cargo, they will be taken to the Animal Reception Centre. There, their documentation will be reviewed by the staff of the ARC to ensure all is in order. At the same time, relevant customs formalities will be completed by staff based at the arriving airport.
4. How long does the travel paperwork and other travel preparations take?
This depends entirely on the location that your pet is traveling to. Your pet relocation compnay will provide you with an accurate timeline of how long the relevant preparations will take and at what point in the process the various steps must be taken.
In some cases they can get your pet ‘travel ready’ in a few days. In others it can be up to six months or more.
5. What vaccinations does my pet need to travel?
Regardless of where your pet is traveling, they will need certain vaccinations. The exact vaccinations they need are entirely dependent on the location they are traveling to. The one vaccination that is mandatory for every country your pet may travel to is a rabies vaccination.
Other vaccinations may also be necessary. These will be advised to you as relevant. In every situation, it is essential to keep your vaccinations current and to not miss a due date, even by one day. To do so could severely hinder your pets travel plans.
Source: Pawsome Pets UAE
