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Hot earnings to keep fire under growth-stock rally

LiveMint logoLiveMint 30-04-2017 Livemint

Don’t look for the outperformance of growth stocks to fade any time soon, as long as corporate earnings continue to improve and hopes remain for stronger economic growth.

The Russell 1000 Growth index .RLG, which tracks such shares, is up 10.9% so far this year, outpacing the US benchmark S&P 500 stock index’s 6.6% rise and the 2.8% advance of the Russell 1000 Value index .RLV.

And it’s not just a US phenomenon.

Growth stocks, whose profits are expected to grow at a faster pace than the broader market, are also outperforming their value counterparts in Asia and Europe. Still, the appeal of riskier stocks perceived as better positioned to ride an accelerating global earnings tailwind, as opposed to those with a greater cushion of safety, is nowhere as far ahead as it is on Wall Street.

The average estimate of analysts for earnings per share growth this year of S&P 500 firms has risen to 11.3% from 10.9% at the start of the month, according to Thomson Reuters data, a trend that should continue to blunt concerns about lofty growth valuations. Reuters

China manufacturing gauge declines

China’s official factory and services gauges pulled back from multi-year highs, dimming the outlook for the sustainability of the past two quarters’ acceleration in economic growth.

The first official economic indicator for the second quarter signals the expansion may be poised to decelerate this year after unexpectedly picking up to 6.9% in the first quarter, the first back-to-back acceleration in two years.

Naveen Kumar Saini/Mint

The factory and services gauges remain at relatively robust levels, but April data showed broad-based weakening across employment, output, new orders and export orders.

While analysts have upgraded forecasts for growth this year, according to a recent Bloomberg survey, tighter property curbs introduced in major cities and a higher base of producer prices than last year may weigh on output, and top officials have signalled they will introduce stricter measures to curb financial risk.Bloomberg

Raw sugar futures fall for 12th straight week

If you binged on sugar last year, you’re probably feeling sick. Raw sugar futures have fallen for 12 straight weeks, the longest run since data on the contract begins in 1961.

While prices are about the same level as a year ago, it’s been a huge swing up and down. The reasons: a surplus is hitting the market and speculation that India, the world’s top consumer, would need to import the sweetener isn’t materializing.

It’s a lesson in commodity-market volatility. Last year, sugar was the best-performing raw material as forecasts for a deficit lured in speculators and hedge funds.

Subrata Jana/Mint

This year, it’s the reverse.

Traders are exiting bullish bets and prices are down 17%, more than any other crop in the Bloomberg Commodity Index.

Raw sugar for July delivery rose 4.5% to settle at 16.13 cents a pound at 1.02pm on ICE Futures US in New York, ending a four-day slump. This week, the price dropped 2.3%. Bloomberg-

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