{"id":107756,"date":"2017-06-20T07:10:34","date_gmt":"2017-06-20T11:10:34","guid":{"rendered":"http:\/\/countingpips.com\/?p=107756"},"modified":"2017-06-20T07:10:34","modified_gmt":"2017-06-20T11:10:34","slug":"tech-sector-continues-to-lead-as-central-bankers-influence-currencies","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/06\/tech-sector-continues-to-lead-as-central-bankers-influence-currencies\/","title":{"rendered":"Tech sector continues to lead as central bankers influence currencies"},"content":{"rendered":"
June 20, 2017<\/div>
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Article by ForexTime<\/a><\/p>\n

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Investors fell in love again with tech stocks. The sector which was held responsible for the pullback in equities in the last two weeks is driving indices to record highs. Suddenly valuations are no longer a worrying factor, and Fed tightening is less of a concern. It seems like bargain hunters were waiting for the opportunity to dive in. Although many market participants considered tech stocks either expensive or bubble-like after the S&P 500 information technology sector soared 22% from the beginning of the year to 9 June, it still doesn\u2019t make sense to compare this rally with the tech bubble burst in 2000. The current leaders in the sector are the FAAMG\u2019s \u201cApple, Alphabet, Microsoft, Amazon, and Facebook\u201d. Their aggregate average forward P\/E ratio stands at around 23.5, which is less than half the forward P\/E for big tech stocks in 2000. Cash balances are more than six times higher than the levels of 2000 and cash flows are in a much better shape. Although valuations are not comparable to 2000, they are still high in contrast to previous levels. Given that earnings are expected to continue growing at a rapid pace, the overstretched valuations are justified, and any dip will be seen as an opportunity to buy.<\/p>\n

Comments from New York Fed President William Dudley provided the dollar with a boost yesterday. He seemed confident that inflation would return as the jobs market pushes wages higher. More interestingly, he said that he is not paying too much attention to signals of concern from bond markets, which has been flattening for some time. Fixed income traders were sending negative messages more recently, the most obvious being that they don\u2019t believe the tightening cycle path will continue as expected. Although yields on ten-year bonds moved higher after Dudley\u2019s comments, they are still not signaling high confidence in economic growth. Thus, economic data in the next couple of weeks should be robust enough to convince bond investors that the economy is on the right track, and for the dollar to continue appreciating. Fed Vice Chair Stanley Fischer is due to speak today. If he shares Dudley\u2019s views, the dollar is likely to continue rallying.<\/p>\n

Brexit talks began yesterday. The first day of the negotiations ended calmly with both sides agreeing to focus on Britain\u2019s exit bill and the rights for EU citizens living in the UK and vice versa. It will probably take some time for negotiations to start influencing the Pound\u2019s direction. Instead, investors today will focus on what BoE\u2019s Mark Carney has to say after three MPC policymakers voted to raise interest rates last week. Rising prices and falling wages is one of the biggest challenges a central bank can face, and investors need more clarity on what tools are available to tackle these problems.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

Disclaimer: <\/strong>The content in this article comprises personal opinions and should not be construed as containing personal and\/or other investment advice and\/or an offer of and\/or solicitation for any transactions in financial instruments and\/or a guarantee and\/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.<\/em><\/p>\n

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\"Forex-Time-Logo\"Article by ForexTime<\/a><\/span><\/strong><\/p>\n

ForexTime Ltd (FXTM)<\/strong> is an award winning international online forex broker regulated by CySEC 185\/12 www.forextime.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Article by ForexTime Investors fell in love again with tech stocks. The sector which was held responsible for the pullback in equities in the last two weeks is driving indices to record highs. Suddenly valuations are no longer a worrying factor, and Fed tightening is less of a concern. It seems like bargain hunters were […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-107756","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/107756","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=107756"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/107756\/revisions"}],"predecessor-version":[{"id":107768,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/107756\/revisions\/107768"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=107756"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=107756"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=107756"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}