Traders Questioned : where has the Bear Gone

Investors are hopeful this week might be the best for equities this year, thanks to a positive trend since Monday. They're betting on the end of the central bank rate hike cycle. The momentum has been strong since Wednesday, although Apple is facing challenges and Sam Bankman-Fried might struggle.

Equity markets are on track for a positive week, with several major indexes like S&P500, CAC40, and DAX witnessing four consecutive sessions of gains, effectively erasing previous losses. The driving force behind this upward momentum is the growing belief among investors that monetary policy is now unlikely to tighten further. This conviction solidified after scrutinizing the recent decisions and comments from both the Fed and the Bank of England. Despite the central bankers' usual cautious language, optimistic investors focused on the pause in the tightening cycle, which sparked a wave of positivity in the market.   Investors responded robustly to the central banks' announcements, leading to significant gains in various indexes. For instance, the Nasdaq surged by 1.8% on Wednesday and another 1.7% on the following day. In Europe, the Stoxx Europe 600 saw a notable increase of 1.6%, the CAC40, Bel20, IBEX, and OMX Nordic, even managed to maintain advances above the symbolic 2% closing ceiling during the sessions. This positive market sentiment is likely to persist, at least until US inflation data for October is released on November 14, prompting investors to reassess the situation. Despite the recent turmoil, financiers remain optimistic, foreseeing continued economic growth that would enable corporate earnings to rise despite the prevailing high interest rates. This confidence is rooted in past trends. However, this outlook relies on two key assumptions: first, that these high rates won't cause significant collateral damage, particularly in real estate or the debt market, which could disrupt the process; and second, that prices won't overheat, potentially negating the Fed's efforts to soften the impact. The latter point is particularly contentious and often emphasized by the US central bank to justify maintaining high rates over an extended period. Corporate earnings releases, crucial for investor confidence, have generally met the required standards, preventing widespread panic, although there have been a few concerns. Notably, Apple, a significant player in Wall Street, faced a 3-4% decline in after-hours trading after releasing quarterly results that received a lukewarm reception. According to Andrew Uerkwitz from Jefferies, sales were slightly lower than expected, with strong iPhone performance in September offset by challenges in China due to competition from Huawei and regulatory issues. Disappointing forecasts for tablets and Macs further contributed to the drop, leading to an anticipated fall in the company's share price. In significant news, Sam Bankman-Fried was found guilty of fraud in the FTX trial, marking the largest cryptocurrency scandal so far. Under the cumulative sentencing system in the United States, he could face up to 110 years in prison. The sentencing is set for March, causing a buzz in the international press. Meanwhile, the focus remains on the monthly employment figures for the United States, a crucial indicator of American monetary policy, even amid the current positive economic climate. The Asia-Pacific region is without the Tokyo Stock Exchange this morning, which is closed for a public holiday. China is soaring in the wake of Western markets, with gains of 2.7% for the Hang Seng in Hong Kong. South Korea and Australia gained over 1%, while India was more measured but up 0.5%.