November 24, 2017

Return to favor of the stock market after "Thanksgiving"?

Management comment

Thanksgiving, Black Friday, Cyber Monday... these key milestones in the US also represent major events for French investors. US consumer sentiment will be very closely watched at a time when nothing appears to be able to derail the current dynamic economic momentum.

Exceptionally however, the eurozone continues to beat forecasts, with indices and data hitting new highs across the board (business climate, industrial production) breaking the all-time records established in 2007 and 2011. The European economy is now in the capex-recovery phase, after recording a phase of dynamic exports (thanks to the weak euro) and a consumer-recovery phase supported by the accommodating monetary policy adopted by the ECB.

In contrast, the UK has not yet managed to reach a compromise between a no-deal Brexit, a soft Brexit or a fake Brexit. Political support is eroding daily for Theresa May faced with the apparent intransigent stance adopted by Brussels. Following the market correction in November, investors are obliged to accept the reality denoted by the indicators. Some are even beginning to anticipate a surge in inflation, particularly in the US. Inflow into Treasury inflation protected securities (TIPS) peaked for the third week in a row since 2007.

Thanksgiving has traditionally marked the beginning of the most bullish part of the year for equity markets. Since 1945, the US market has gained 6.7% on average between November and April, rising 76% of the time. Thanksgiving could also therefore be a period of grace in the equity markets.

Igor de Maack, Fund manager and spokesperson at DNCA. This article was finalised in November 24th, 2017.

This promotional document is a simplified presentation and does not constitute a subscription offer or an investment recommendation. No part of this document may be reproduced, published or distributed without prior approval from the investment management company.

DNCA Investments is a trademark held by DNCA Finance

Thanksgiving, Black Friday, Cyber Monday... these key milestones in the US also represent major events for French investors. US consumer sentiment will be very closely watched at a time when nothing appears to be able to derail the current dynamic economic momentum. Exceptionally however, the eurozone continues to beat forecasts, with...
2017-11-24