(Reuters) – There appears to be little or no standing in the best way of stock-market bulls proper now, however a landmark U.S./Russia summit in Alaska, a central financial institution shin-dig in Wyoming and elections in Bolivia, amongst different issues, might imbue them with some warning.
This is your week forward from Rocky Swift in Tokyo; Suzanne McGee and Rodrigo Campos in New York and Dhara Ranasinghe and Naomi Rovnick in London.
1/ BEGINNING OF THE END?
Buyers will carefully watch U.S. President Donald Trump’s assembly with Russia’s Vladimir Putin on Friday seeking to finish the battle in Ukraine.
There’s warning over the longevity of any settlement and Europe’s leaders are fearful that the U.S. and Russia might take far-reaching choices that sidelines them, or seeks to coerce Ukraine into an unfavourable deal.
This backdrop means shares, particularly in Europe, ought to profit if the Trump-Putin Alaska summit receives a broad thumbs-up. The euro and Ukraine’s battered bonds must also acquire. And an enduring finish to the three-year previous battle may very well be a tailwind to world disinflation (ex-U.S. that’s).
But, the satan is within the particulars and Europe is unlikely to embrace Russia, even when peace returns. Meaning the one-way march greater in protection shares might ebb, however will not be severely disrupted.
2/ JACKSON HOLE-IN-ONE
It is formally summer season in monetary markets. Q2 earnings are out, the subsequent crop of main financial information is not till early September and lots of cash managers and merchants are heading out to the seashores for a break. There is only one factor to fret about: Jackson Gap.
The Wyoming resort performs host to the annual central bankers’ schmoozefest and can embody Federal Reserve Chair Jerome Powell amongst its attendees. The convention takes place as shares hover close to file ranges, and Trump continues to take pot-shots at Powell.
Jackson Gap has the potential to be disruptive. Any trace from Powell {that a} September price reduce is not occurring and markets might unload arduous, whereas a very upbeat tone from the Fed chair might feed extra euphoria. “And bull markets die in euphoria,” says Steve Sosnick, strategist at buying and selling agency IBKR.
3/ STAGFLATION NATION
As world shares rally, all the pieces from weak U.S. jobs information to bother on the high of the Federal Reserve has been a motive to wager on U.S. price cuts, that means it isn’t been worthwhile to be bearish.
About 60% of world buyers surveyed by BofA suppose U.S. stagflation may very well be the dominant world market regime inside three months.
A basket of shares that do properly in stagflationary environments, the place progress slows as inflation accelerates, has been outpaced by Wall Road’s benchmark S&P 500 index this 12 months, Societe Generale strategists reckon.
