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13 Apr 2015
Global bourses soar, valuations extraordinarily high - ANZ
FXStreet (Bali) - Global bourses had a solid end to last week, notes the Research Team at ANZ, adding that absolute valuations are extraordinarily high.
Key Quotes
"There wasn’t a lot in the way of data or news flow to drive markets in to the end of the week, but in the equity space it appears the default remains ‘if in doubt, buy’. Global bourses had a solid end to the week."
"European stocks rose to a new all-time high, while in the US the S&P 500 closed within 1% of record highs. In Asia, the Nikkei is close to a 15 year high, the Shanghai Composite is back above 4,000 for the first time since 2008 and the Hang Seng recorded its biggest weekly gain (7.9%) since 2011."
"Despite momentum in some major economies decelerating (eg China) and with political risks present in some regions (Europe), there is one theme that appears relatively common: stimulus-induced support."
"Even in the likes of the US recent signs of softer economic data is igniting hopes that the withdrawal of policy stimulus will be delayed, providing markets an additional boost. It is also helping to drive volatility lower, with the VIX falling to 12.6 on Friday – the lows for the year."
"But we are a little wary. In many markets, absolute valuations are extraordinarily high. The Shiller PE for the S&P 500 is 65% above its historical average. The PE for the Euro Stoxx 600 (at 17.3) is the highest in a decade. Admittedly, relative valuations (such as against bond yields) are not nearly as stretched."
Key Quotes
"There wasn’t a lot in the way of data or news flow to drive markets in to the end of the week, but in the equity space it appears the default remains ‘if in doubt, buy’. Global bourses had a solid end to the week."
"European stocks rose to a new all-time high, while in the US the S&P 500 closed within 1% of record highs. In Asia, the Nikkei is close to a 15 year high, the Shanghai Composite is back above 4,000 for the first time since 2008 and the Hang Seng recorded its biggest weekly gain (7.9%) since 2011."
"Despite momentum in some major economies decelerating (eg China) and with political risks present in some regions (Europe), there is one theme that appears relatively common: stimulus-induced support."
"Even in the likes of the US recent signs of softer economic data is igniting hopes that the withdrawal of policy stimulus will be delayed, providing markets an additional boost. It is also helping to drive volatility lower, with the VIX falling to 12.6 on Friday – the lows for the year."
"But we are a little wary. In many markets, absolute valuations are extraordinarily high. The Shiller PE for the S&P 500 is 65% above its historical average. The PE for the Euro Stoxx 600 (at 17.3) is the highest in a decade. Admittedly, relative valuations (such as against bond yields) are not nearly as stretched."