Tuesday saw a decent recovery in European equity markets as overnight on Monday Asian markets held in well. Europe was then further boosted by a solid performance from over the pond, as both economic and corporate news proved encouraging. When commenting yesterday how well asset prices took the recent increase in geopolitical tensions, we forgot to mention the performance of MSCI Emerging Markets index. A recovery in developed markets was understandable, but continued caution could easily be justified from investors to emerging markets. Just as most developed markets quickly regained their poise, so has the EM index, closing on Monday night back at its recent highs. Equity markets continue to climb the wall of worry defying all the doom mongers out there, who sit quietly prepared to say I told you so.
On reflection it feels an unusual time, we often think of the wall of worry relating to equity markets, but currently it feels as if it exists to some extent in virtually every asset class. Investors worry about the impact one day central banks printing presses could have on inflation and the bond market, they look at equities and worry about the fact that markets are back to or close to all time highs. They worry about the banks, not so much these days for the safety, but either because they get no income from their savings or the missed opportunity as asset prices rise, and worry whether they should allocate money to these assets.
Technology shares were in focus on Tuesday evening as two of the giants reported their earnings numbers, Apple and Microsoft. The first to release was Microsoft who announced fiscal fourth quarter revenues ahead of expectations, notwithstanding the revenue beat Microsoft missed on earnings, the share price rose modestly in post hours trading. Apple the reverse, missed on revenue expectations but managed to beat on earnings, the shares gave back a little of its recent gains. It rather looks in this case anyway that revenue beats were slightly better rewarded than earnings beats by investors.