Endless Rotations - Holdun

Market Summary

Leading equities indices extended their recent grind higher amid quiet trading with the S&P 500 achieving its 47th new record high close of 2021 in the process. The Dow Jones Industrial Average was supported by sector rotation with re-opening areas such as Financials and Industrials benefiting while Technology has given back some relative performance.

US inflation remains at its highest level in over a decade following July’s CPI figure, which reported a YoY increase of 5.4%. Crucially, while the inflation figures remain high in relative terms, the growth rate of inflation has now slowed significantly, providing more evidence that the recent inflation surge may be transitory.

Stocks

S&P 500

0.8%5-DAY RETURN

Financial and energy companies have trended higher in recent weeks, outperforming the high-flying tech companies. Companies such as JP Morgan have experienced a reversal of fortunes and are now up almost 30% YTD. The major question mark is, can this recent outperformance be sustained this time around, or is this just another momentary day in the sun for value investors.

Crypto

Cardano

47.3%7-DAY RETURN

Crypto names across the board made significant gains this week.

Ethereum plans to move away from the ‘proof of work’ to a ‘proof of stake’ model to help reduce the carbon footprint associated with mining new coins.

Heavy retail trading across the altcoin space and a less aggressive tone from Washington also helped the crypto universe reclaim a market valuation of over $2 Trillion this week.

Market Outlook

Looking ahead, weaker than expected Chinese data due to restrictions imposed to stop the spread of the delta variant, renewed pressure on central banks to begin tapering measures and an increasingly narrow market breadth could threaten market sentiment.

This week, the retail sector will be one to watch from an earnings standpoint, with Walmart, Home Depot, Target and Macy’s all reporting. Comments on how the Delta variant is impacting their bottom line will indicate whether or not the recent ‘re-opening run’ can continue.

HOLDUN