- ESL evaporates as Netflix falters
- Slow start to trading after yesterday’s stumble
- UK inflation came in at 0.7 per cent
Stocks suffered yesterday as the reopening trade took a hit. We could look to surging cases in India for a sense of alarm or unease, whilst tensions around the Ukraine and Russia are arguably adding a dullness to trade. But a technical pullback from aggressively overbought positioning seems to be more of a factor. I don’t think that the macro picture has altered much since Friday; US 10 year yields are subdued around 1.55-1.60 per cent. Earnings are coming in better than expected or at least in line, and clearing a very high bar in the process.
But investors seem content to park gains for the moment and reassess. It’s all about the E bit of the PE ratio now as we can no longer rely on optimistic margin expansion driven by the Fed – it’s all in already. True, travel stocks were badly affected – it looks more and more that international travel is several months behind where we thought it might have been at this stage. The fact that the US State Department plans to slap “do not travel” advisories on 80 per cent of countries underlined the way in which vaccines are only going to deliver a true return to normal once the world is inoculated. Earnings are by and large very strong but that’s already been discounted by a stock market that hit a record high last Friday. Similar story for the DAX. The FTSE has a longer path to travel hit its all-time highs again but this only offers hope for progress.