June: Will It Turn Into Another Tumultuous Month For the Markets?

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Asian Stocks Higher after Announcement of Export and Import Data from China
Asian Stocks Higher after Announcement of Export and Import Data from China

On Monday, Nikkei Stock Index, the benchmark in Japan slump to its lowest in last six weeks, leading to building up of speculations about another volatile month for major equities on the globe. Analysts meanwhile, believe that a degree of peace will return to markets in Asia, Europe, and the U.S., due to reconsideration of anticipations for the monetary policy by Federal Reserve. However, most analysts believe that the downside financial markets saw last month, is expected to calm down this month.
The taking back of the massive monetary spur by the Federal Reserve in U.S. was the force that motivated large scales sell off for stocks in May. Seeing the liquidity, a slight contraction is not going to make a big difference. Markets thus, do not need to worry about the withdrawal of liquidity, this June. FED’s current protocol of purchasing $85 billion value of treasury and mortgage backed bonds on a monthly basis has helped in keeping the interest low and thereby causing the economy to pull through.
It has been seen that the equity markets this year in developing nations has united every month, except May, when the same slumped by 0.3%. Meanwhile, June did not experience a good start based on shrunk factory activity on China, which has been seen first time in seven months, diluting regional equity markets.
Nikkei, which seemed the most volatile market in May, is speculated to witness some near term decline, without any vision to get hard hit. The Nikkei slumped by above 15%, is still above the year-to-date profit by about 33%.
Japan managed to remain the best performing equity markets on the globe, encouraged by a weakened yen and better economic potentials. Tokyo’s long-term growth plan, expected to release this week, can cause an unmarked turn for the market.
The parliamentary elections are on charts for July and Japan would never want a slump for the Nikkei before or during this. Thus, it is not good to get bearish on this commodity, seeing the ongoing trend.
Thus, speculations about whether the June month will turn into another turbulent month for the market or not, still remains unanswered, but status looks good, overlooking the same.