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Stocks little changed. U.S. stocks opened little changed this morning after the S&P 500 Index notched its fifth record high in the past two weeks on Thursday. Stocks climbed on news that the United States and China have both agreed to roll back tariffs if a limited trade agreement is reached.
Signs of stretched markets. New highs and big gains so far this year need not be viewed bearishly, despite signs that markets may be getting stretched in the very near term. Put-call ratios, measures of investor demand for options protection, are extremely low, and several short-term momentum indicators for major indexes are nearing overbought conditions.
New highs abound. Optimistic trade developments over the past month have powered a global stock rally. The MSCI All-World Country Index closed within 1.5% of a record high on Thursday. The STOXX Europe 600 Index hit its highest level since 2015 this week, while Japan’s Nikkei 225 Index marked a 52-week high. On the LPL Research blog today, we’ll highlight international stocks’ recent gains and discuss whether the relative outperformance may continue.
China imports, exports slide. China’s imports (in U.S. dollar terms) slid for a sixth straight month in October, indicating declining domestic demand for the world’s second-largest economy. China’s exports (in dollar terms) also fell last month, but the decline was less than consensus estimates. Easing tensions between the United States and China should eventually help buoy trade activity and manufacturing for both countries, but it may take a while for demand to recover.
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