Global Indices Monthly Outlook – June 2017

The major stock markets around the world continued to trade in a strong and steady manner during the course of the month of May and it is indeed to the credit of the bulls that they have managed to hold up the stock markets despite all these uncertainties and the pressures from the various parts of the globe and they also managed to ensure that almost all the stock indexes around the world managed to close the month near their range highs which increases the expectations for the month of June as well.

US Stock Indexes Shrug Off Risk Events

Over the last month, we have had several events of risk starting right from the beginning of the month and Trump and team went about their business of fixing things their way but later found that they could not get everything done in the way that they wanted. They failed to bring in a new healthcare plan and the tax cuts that they announced are still not put into motion and no one seems to be knowing in what status it is in. Also, we saw Trump getting accused of sharing sensitive info with the Russians.

We also saw that the decision of Trump to fire his FBI director came to bite him back as there were reports that the former director was bringing in a memo against him for interfering with an ongoing investigation. It took a lot of effort from Trump and his team to beat back these accusations and it was a period that the risks were very higher and though the US stock indexes did correct as a result of this risk event, they managed to hold generally steady and once the storm blew over, they were able to continue their progress.

We also saw a few members of the Fed and the politicians in the US express their concern over the rising stock markets and they wondered whether this was sustainable and whether this was backed by some strong fundamentals. Again, the stock markets did dip a bit on these reports but still managed to come back stronger and move higher. So, we saw a situation where corrections did come about but these were mainly shallow and were always followed by some quick and strong bounces which showed the strength of the stock indexes.

The US stock indexes closed near their highs of the month but we can sense that the investors are getting a bit jittery. It remains to be seen whether the rate hike cycle is going to get faster in the months to come and the uncertainties can easily weigh on the stock indexes anytime. With Trump at the helm, there is never a moment to relax and this is one of the reasons why the investors are thinking twice before committing themselves to buy at these high ranges of price. The coming month could be interesting and could also mark the month when the first signs of exhaustion and turnaround for this year begin to show.

Euro Stock Markets Hold Steady

The European stock markets also had a good month in May and they also managed to close the month near their range highs. They were helped in this by the continuing good economic data from the various parts of the Eurozone and the UK as well, so much so that the usually dovish ECB was forced to be hawkish in some of the statements from its members. This helped to keep the DAX buoyed and though it did have a correction on the back of the political tensions in the US, it managed to stay above some strong support and close the month in a strong manner.

The other indexes like the FTSE and the Italian stock index were also buoyed by strong economic data and the same trend is expected to continue in the month of June as well, though we suspect that the investors would tend to get tired as we approach the end of June and start showing the first signs of weakness for this year.

Asian Stock Markets Follow the Global Template

It was also one of the months when most of the stock markets around the world seemed to be moving in tandem and this was further evidence of how connected the entire world is. This led to the Asian stock markets also following the same path as the ones in the US and the Europe and with no one specific event dominating the headlines in Asia, this kind of action was justifiable.

So, we saw the Japanese stock index generally have a pretty decent time with steady kind of movements and it also closed the month in a strong manner, in line with the stock indexes around the world. The HK and the Indian index also seemed to be glad to follow and this was really one of those months when there was not much volatility in the stock markets with many risks being largely ignored or atleast quickly taken care of.

The coming month would be an interesting one for all the stock markets as they are all near their all time highs and we have started seeing economists and other elite traders talk about an impending correction that is likely to be large and deep and June may see the kickstart of this.