Repost: February’s Market: Volatility, Geopolitics And Earnings Are On Watch

Here’s the latest global stock market and economic updates from Forbes:

 

  • Brexit, Shutdown Add to Uncertainty
  • Earnings Season Kicks Off on Mixed Note
  • Fed Takes a Backseat in Investor Concerns
  • Treasuries Buck Economic Trends
  • It’s not too early to prepare for Tax season

 

Michael Nagle/Bloomberg© 2019 Bloomberg Finance LP

 

February could bring a heaping plate of geopolitical drama to markets around the world, potentially helping to end a brief calm that settled over January.

 

As the month starts, markets were basking in the Federal Reserve’s decision to hold interest rates steady, along with better than expected earnings results from Boeing and Apple. In fact, many Wall Street analysts have indicated they now expect no interest rate increase at all this year after the Fed said it will remain “patient.” So stocks begin February propelled in part by the ongoing earnings season and the Fed’s dovish tone.

 

Still, several question marks hover over the next few weeks. First, the U.S. and China only have about four weeks until their self-imposed early March deadline to get some sort of trade agreement in the books, or we could see tariffs jump. Of course, any more trade tension could likely put the market in a tailspin in both countries and perhaps around the world. As of late January, optimism seeped in around positive developments, but there was no word of an imminent deal.

 

That’s just one reason why volatility—which surged in December as investors fretted about a possible global economic slowdown—could once again become a factor into February. The markets spent January recovering from December’s sell-off, but as a new month begins nothing is certain. Even the government shutdown—which ended with stopgap funding through Feb. 15—could resurface if lawmakers don’t agree on an immigration and border security deal.

 

As of late January, the S&P 500 Index was up approximately 7% year to date, the Dow Jones Industrial Average was up about 7.2% and the Nasdaq was up 8.2%. At the end of last year, key sectors like info tech, financials, and transports had remained under pressure, signs that investors apparently had doubts about U.S. and global economic growth. But those sectors showed much more buoyancy throughout January. The fact that COMP is leading the major indices might be an early sign of investors starting to embrace more risk, since it’s dominated by tech and biotech names. In addition, the small-cap Russell 2000 had the best start to a year since 1987.

 

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