ThomasLloyd, the global investment and advisory firm, on Wednesday said market sentiment is moving from ‘buy the dip’ to ‘sell the rallies’ in US.
In an interview to CNBC-TV18, Nick Parsons, head-research and strategy, said it's not just the US equities that are falling, but across the spectrum all asset classes are seeing it. It's their weakest performance in at least five years. In fact, the best performance across all asset markets in America is cash."
Parsons said, “Gold is flat on the year, corporate credit is down on the year, treasuries are flat and US equities have given up all the year-to-date gains."
“The problem is that nothing is working. There is no single asset class that is showing positive returns above those, which you can get in cash and that is weighing down on investor sentiment in the US in the week when there is thanksgiving holiday and we are only six weeks from year-end. So, sentiment is very negative,” he said.
However, Parsons said the positive news is the surprisingly good performance of emerging market equities and currencies like Indian rupee, the Philippine peso and the Indonesian rupiah, adding that it could be the currency market that could hold the clues here.
“If we continue to see resilience in foreign exchange in emerging market currencies, then that bodes well for emerging markets relative performance. However, if strength in emerging market currencies come to an end, then it would send alarm bells across emerging market equities," said Parsons.
"As of now, the growth scare may just be a stock market apprehension. But one will have to closely watch the retail sales period, which kick starts after Thanksgiving as it will be an important barometer than it has been in the earlier years," he added.