According to all major economic reports, the world’s largest economy is in a stable position. That includes the early April reports for weekly jobless claims, retail sales, etc. However, many indicators of potential future weakness continue to be alarming. So, investors should pay more attention to value stocks.
The list of potential issues is quite impressive. Interestingly, that list starts with still raging inflation leading to a Hawkish Fed. The fear is that the central bank will go too far in tamping down the flames of inflation that they actually produce a recession with a bear market in tow.
Also emerging at this time is a counterbalance that there are indications of peaking inflation. Meaning inflation is at its ugliest at the moment and will improve going forward.
If this is the case, then it lessens the need for Fed intervention…and hence weakens fears that they will overly remove accommodation…and thus lessens the odds of recession as well as a bear market.
After taking into account all risk factors, it makes sense to invest in value stocks.
Stocks and investors
Stocks in Asia-Pacific were mixed on April 18. In Japan, the Nikkei 225 declined 1.08% to end its trading day at 26,799.71 as shares of Fast Retailing dropped 1.25%. The Topix fell 0.86% to 1,880.08.
Mainland Chinese stocks closed mixed on April 18. The Shanghai composite fell 0.49% to 3,195.52. The Shenzhen component gained 0.368% to finish its trading day at 11,691.47.
The country saw faster-than-expected GDP growth in the first quarter. First-quarter GDP in China jumped 4.8%, above 4.4% expectations for a 4.4% year-over-year increase.
Retail sales in the first month of spring, nevertheless, declined by a more-than-anticipated 3.5% as compared with a year earlier.
In South Korea, the Kospi dropped 0.11% to close at 2,693.21.
Markets in Australia and Hong Kong were closed on April 18 for a holiday.