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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The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
MANDOOB
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Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
Getting there
Flydubai flies direct from Dubai to Tbilisi from Dh1,025 return including taxes
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Manikarnika: The Queen of Jhansi
Director: Kangana Ranaut, Krish Jagarlamudi
Producer: Zee Studios, Kamal Jain
Cast: Kangana Ranaut, Ankita Lokhande, Danny Denzongpa, Atul Kulkarni
Rating: 2.5/5
PRO BASH
Thursday’s fixtures
6pm: Hyderabad Nawabs v Pakhtoon Warriors
10pm: Lahore Sikandars v Pakhtoon Blasters
Teams
Chennai Knights, Lahore Sikandars, Pakhtoon Blasters, Abu Dhabi Stars, Abu Dhabi Dragons, Pakhtoon Warriors and Hyderabad Nawabs.
Squad rules
All teams consist of 15-player squads that include those contracted in the diamond (3), platinum (2) and gold (2) categories, plus eight free to sign team members.
Tournament rules
The matches are of 25 over-a-side with an 8-over power play in which only two fielders allowed outside the 30-yard circle. Teams play in a single round robin league followed by the semi-finals and final. The league toppers will feature in the semi-final eliminator.
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
Mohammed bin Zayed Majlis
Killing of Qassem Suleimani
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
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Dates for the diary
To mark Bodytree’s 10th anniversary, the coming season will be filled with celebratory activities:
- September 21 Anyone interested in becoming a certified yoga instructor can sign up for a 250-hour course in Yoga Teacher Training with Jacquelene Sadek. It begins on September 21 and will take place over the course of six weekends.
- October 18 to 21 International yoga instructor, Yogi Nora, will be visiting Bodytree and offering classes.
- October 26 to November 4 International pilates instructor Courtney Miller will be on hand at the studio, offering classes.
- November 9 Bodytree is hosting a party to celebrate turning 10, and everyone is invited. Expect a day full of free classes on the grounds of the studio.
- December 11 Yogeswari, an advanced certified Jivamukti teacher, will be visiting the studio.
- February 2, 2018 Bodytree will host its 4th annual yoga market.
Zayed Sustainability Prize
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
Read more about the coronavirus
New Zealand squad
Tim Southee (capt), Trent Boult (games 4 and 5), Colin de Grandhomme, Lockie Ferguson (games 1-3), Martin Guptill, Scott Kuggeleijn, Daryl Mitchell, Colin Munro, Jimmy Neesham, Mitchell Santner, Tim Seifert, Ish Sodhi, Ross Taylor, Blair Tickner
Results
2.15pm: Maiden (PA) Dh40,000 1,700m; Winner: AF Arrab, Antonio Fresu (jockey), Ernst Oertel (trainer).
2.45pm: Maiden (PA) Dh40,000 1,700m; Winner: AF Mahaleel, Antonio Fresu, Ernst Oertel.
3.15pm: Sheikh Ahmed bin Rashid Al Maktoum handicap (TB) Dh200,000 2,000m; Winner: Dolmen, Richard Mullen, Satish Seemar.
3.45pm: Handicap (PA) Dh40,000 1,200m; Winner: Amang Alawda, Sandro Paiva, Bakhit Al Ketbi.
4.15pm: The Crown Prince of Sharjah Cup Prestige (PA) Dh200,000 1,200m; Winner: AF Alwajel, Tadhg O’Shea, Ernst Oertel.
4.45pm: Handicap (PA) Dh40,000 2,000m; Winner: Al Jazi, Jesus Rosales, Eric Lemartinel.
Killing of Qassem Suleimani
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Zayed Sustainability Prize
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
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.
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
Retail gloom
Online grocer Ocado revealed retail sales fell 5.7 per cen in its first quarter as customers switched back to pre-pandemic shopping patterns.
It was a tough comparison from a year earlier, when the UK was in lockdown, but on a two-year basis its retail division, a joint venture with Marks&Spencer, rose 31.7 per cent over the quarter.
The group added that a 15 per cent drop in customer basket size offset an 11.6. per cent rise in the number of customer transactions.
