European stocks rarely break record for the 48th time in the S&P 500 years

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Eyes “closed and opened”, European and American stock markets have reached new highs again-in the past two weeks, this scene seems to have become a commonplace and accustomed phenomenon for many Asian investors. The fall is truly valuable news… and the strong performance of the European and American stock markets is in sharp contrast with the recent trend of Asian stock markets that have always been trembling.

Data show that the 60-day correlation between the MSCI Asia Pacific Index and the S&P 500 Index has dropped to zero this week. In the past ten years, this indicator has been in the positive zone for about 90% of the time.

In this regard, many netizens jokingly said, “Asian stocks fell when Europe and America rose, and Asian stocks fell when Europe and America fell. This correlation is indeed zero. As for why it is not negative, it may be because it is difficult to see Europe and America. Asian stocks rose when they fell…”

　　European stocks rarely break record for ten consecutive gains

This Friday (August 13th), the pan-European STOXX 600 index closed high for the 10th consecutive trading day, tying the record for the longest consecutive rise since December 2006, and at the same time set a new historical high in this tenth consecutive week. Five further set a record high of 476.16 points. This also means that since entering August, the pan-European STOXX 600 index has never seen a decline.

Prior to this, the pan-European STOXX 600 index had a longer streak of gains than this, and it dates back to the 11 streak of gains in 1999 at the end of the last century. The index has recorded seven consecutive nine-day rises in the past 15 years, the last time being in June this year.

The 10-day record of setting a new high while rising in a row will be further traced back to 1990.

In terms of the performance of the stock indexes of the EU member states, the German DAX index closed up 0.25% this Friday, breaking the 16,000 point mark for the first time in history, and the French CAC 40 index rose 0.2% on Friday. The index also reached its highest level in nearly 21 years. . In addition, the Italian stock index is now close to its highest level since September 2008.

Analysts pointed out that the recent strength of European stocks has benefited from the market’s optimism about the strong earnings season and the steady recovery from the economic downturn caused by the epidemic. This makes investors optimistic that European stocks, which have underperformed US stocks for a long time, have more room for upside.

　　Goldman SachsStatistics show that the quarterly earnings of European stock companies that have reported performance this week’s earnings season are 11% higher than expected. Among them, more than half of the companies’ earnings exceeded analysts’ expectations by at least 5%. Refinitiv IBES data shows that analysts’ latest estimates are that STOXX 600 index constituent companies’ profits in the second quarter are expected to jump by 148.1% in the second quarter, and the expected increase at the beginning of the earnings season is 104.3%.

Goldman Sachs has raised its 12-month target forecast for the STOXX 600 index from 480 to 520 this week, saying it has seen “good catch-up transactions and value” in banking, energy and basic resource stocks. The bank also raised the target forecast for the UK’s FTSE 100 Index from 7,600 to 7,900. Goldman Sachs analyst Sharon Bell said that the strong performance of European stocks this year has gradually caught up with the US stocks. Since the 2008 financial crisis, it has taken 11 years for European stock market profits to rebound. This year, the corporate revenue of European stocks will easily surpass the peak before the pandemic.

　　S&P’s 48th record high in 500 years

While European stocks have recently continued to accelerate their pace of catching up, the bulls in the US stock market have not lost the chain during this period.Dow JonesThe industrial index and the S&P 500 index continued to rise slightly this Friday, and both broke record closing highs again. According to statistics, Friday’s new high is the 48th historical closing high set by the S&P 500 index in a year. In the past century, only 1964 has set a new high for the same period more than the current record.

As of Friday’s close, the Dow Jones Industrial Average rose 15.53 points, or 0.04%, to 35,515.38 points, and the S&P 500 index rose 7.17 points, to 4468 points, or 0.16%;NasdaqThe index rose 6.64 points, or 0.04%, to 14,822.90 points. This week, the Dow has risen by 0.87%, the S&P 500 has risen by 0.71%, and the Nasdaq has fallen by 0.09%.

At present, the S&P 500 index has reached a new high for four consecutive trading days. The US stocks have been steadily performing in the past few trading days, boosted by the strong earnings season, the passage of large-scale infrastructure bills, and the data showing that inflation may rise at a slower rate than expected. Investors’ confidence in economic recovery. The latest data released earlier this week showed that consumer price growth slowed in July, while producer prices recorded the largest year-on-year increase in more than a decade. Investors are now looking forward to the Meeting of central bank governors to find clues about the policy outlook.

It is worth mentioning that when the S&P 500 index rose this year, the average daily increase was only half of 2020. But in terms of the continuity of continuous daily rises, there are few historical precedents in the US stock market over the past seven months.Sundial Data from Capital Research shows that over the past nine months, more than 65% of securities trading prices on the NYSE have remained above the 200-day moving average, which is the third longest duration in 50 years.

Randy Frederick, Managing Director of Charles Schwab’s Trading and Derivatives Division, said, “I was optimistic about the market and expected a good performance, but the current market performance is still beyond my expectations-this is quite remarkable. Yes. It is very difficult to short in any market area right now. Frankly speaking, if you are short, you may not be able to last for long.”

As volatility weakens and the upward trend continues, any trading tool that tells investors what to do besides buying is ending in failure. Back-tested data shows that when applied to the S&P 500 index, half of the 22 technical chart-based indicators tracked by Bloomberg have lost money since the end of March. All of these indicators performed worse than the simple buy and hold strategy, which rose by 12%.

This means that this year’s US stock market is particularly “unfriendly” to bears. The S&P 500 index has now exceeded the market’s most optimistic forecast at the beginning of this year, forcing many short strategists to surrender. At the same time, it has not seen a 5% correction for nearly 200 days. In the past month, at least four strategists have raised the year-end targets for the S&P 500 Index, including David Kostin of Goldman Sachs Group, whose forecast has been raised 400 points to 4700 points.

Editor in charge: Liu Xuanyi