Market trends

While the US banking system steadied in April after the traumas of March, investor sentiment remained under a cloud, but still showed some recovery last month. So with the recent combination of declining markets and a recovering sentiment, was there a shift in investment strategies? On Money in the Market, Hongbin Jeong speaks to Olivier d’Assier, Head of Applied Research, APAC, Qontigo to find out more.

The ROOF portfolios use the sector ROOF Scores to construct sentiment-tracking portfolios that capture the returns from a bullish or bearish strategy. The Risk-On and Risk-Off portfolios are constructed from the holdings of the STOXX® Europe 600 index and are rebalanced monthly (at month-end) using the then-current sector ROOF scores for the European market.

The ROOF portfolios use the sector ROOF Scores to construct sentiment-tracking portfolios designed to capture the returns from the implementation of a bullish or bearish strategy. The Risk-On and Risk-Off portfolios are constructed from the holdings of the STOXX USA 500 parent index and are rebalanced monthly (at month-end) using the then-current sector ROOF scores for the US market.

Melissa Brown, Global Head of Applied Research at Qontigo, says the impact of inflation on earnings will be key.

Melissa Brown, Global Head of Applied Research at Qontigo, notes that trading volume on Wall Street is “much lower than it was a year ago,” and offers three reasons why many investors are choosing to stand on the sidelines.

Melissa Brown, Global Head of Applied Research at Qontigo, says that recent interest in riskier stocks reflects improving sentiment among investors.

Investor sentiment has stopped falling and begun to climb across markets. Olivier d’Assier, Head of Applied Research, APAC, shared with William Watts of MarketWatch, this improvement in sentiment may be a “desperate attempt to bargain with the Rumpelstilskinesque of rising markets.”

The STOXX Global 1800 index rose 3% in dollars and only 0.6% in euros in March. The Fed on March 22 increased its key borrowing rate by 25 basis points to the highest since 2007, but removed from a statement previous references to the need for “ongoing” rate rises.

Olivier d’Assier, Head of Applied Research in APAC, provided insights on falling investor sentiment, high/low-risk sentiments, RBA’s rate-holding capacity, OPEC cuts’ impact on Asia’s inflation and interest rates, 2Q market risks, and potential Fed cut pricing by the market.

The collapse of a Californian bank triggered a rapidly-spreading banking crisis, with Europe suffering the brunt of it. European Banks, Financial Services firms and Insurers have fallen more than their US counterparts, while the risk of each one of those sectors in Europe has jumped.

The recent collapse of several banks has sparked fears of a 2011-style “doom loop,” in which losses in the financial sector spread to the wider economy. So far, contagion has been limited, but a further deterioration in credit quality could result in drawdowns across all sectors.

Haidi Stroud-Watts in Sydney and Vonnie Quinn in New York drive to the Asia, Australia and New Zealand market opens while wrapping the biggest stories of the previous day on Wall Street. Today’s guest: Olivier d’Assier, Qontigo Head of APAC Applied Research