10 July 2018 ( Lagos ) : Global equities kicked off the week on a positive note led by Wall Street, where the Dow Jones Industrial Average rallied 1.31% and the S&P 500 rose 0.88%. The financial sector was the biggest winner ahead of the earnings announcements, while the utilities and telecom sectors saw their stocks decline as investors rotated from the defensive sectors to cyclicals. Such behaviour reflects a market mood that is turning more aggressive towards risk-taking, as investors shift back to fundamentals and put trade war fears behind them.
According to FactSet, S&P 500 company earnings are expected to grow 20% in Q2; when adding in the potential for positive surprises, expect growth to be more than 23%. This should encourage more appetite for risk in the coming days, unless big negative news related to trade disrupts the optimistic mood. The Volatility Index “VIX” also reflected this positive sentiment, by declining 5% on Monday to trade below 13 for the first time since 22 June.
Source: Hussein Sayed, Chief Market Strategist at FXTM
Reporting for EasyKobo on Tuesday, 10 July 2018 in Lagos, Nigeria