Saturday, 28 November 2015

Chinese stocks plunge

Chinese stocks fell sharply on Friday but other markets mostly shrugged off the fall.

The Shanghai Composite Index plunged 5.5 percent, its biggest decline since August, after a report showed a decline in industrial profits and regulators clamped down on brokers.

Other emerging markets were also hit, with the MSCI Emerging Markets Index falling 1.4 percent.

However, the STOXX Europe 600 fell just 0.2 percent and the S&P 500 rose less than 0.1 percent.

The yield on US 10-year Treasury notes fell one basis point to 2.22 percent while Germany’s two-year yield dropped to a record minus 0.42 percent.

Friday, 27 November 2015

Global stocks rise, flattish US market unlikely to remain calm next year

Global stocks mostly rose on Thursday.

The STOXX Europe 600 rose 0.9 percent. It had risen 1.4 percent on Wednesday and is now at a three-month high.

In Asia, the Nikkei 225 rose 0.5 percent but the Shanghai Composite Index fell 0.3 percent.

US stock markets were closed on Thursday.

US stocks have been flattish in 2015 but are unlikely to repeat such a performance next year. Barron's cites Sam Stovall, US stock strategist at S&P Capital IQ, as saying that two consecutively calm years for the US stock market are rare.

Indeed, some analysts are comparing this year's market with 2011 and 1937, comparisons that suggest that next year is unlikely to be calm. From the WSJ's MoneyBeat blog:

Market watchers have been noting similarities between this year and 2011 for several months now. But another year might be a better comparison: 1937.

The distinction is an important one. If you buy the 2011 comparison, you may conclude that stocks are going to rocket higher from here. If you’re inclined to favor the 1937 analogy, you may want to prepare for a downturn.

Wednesday, 25 November 2015

Stocks rebound from early falls after Turkey downs Russian plane

US stocks finished little changed on Tuesday.

The S&P 500 closed 0.1 percent higher after falling as much as 0.8 percent earlier in the session following news of Turkey’s downing of a Russian warplane.

The STOXX Europe 600 Index fell 1.2 percent, paring an earlier loss of as much as 2 percent.

The MSCI Asia Pacific Index rose 0.2 percent, as did the Shanghai Composite Index.

US 10-year Treasury yields were little changed at 2.24 percent.

However, yields on Germany’s two-year notes fell below minus 0.4 percent for the first time while yields on similar-maturity Austrian, Belgian and Finnish securities slipped to record lows.

Tuesday, 24 November 2015

Stocks fall, China remains worry

Stocks fell on Monday.

The S&P 500 fell 0.1 percent, the STOXX Europe 600 fell 0.4 percent and the Shanghai Composite Index fell 0.6 percent.

Despite the rebound in markets in recent months, China remains a source of worry for many. From Bloomberg:

David Tepper says a yuan devaluation may be coming in China. John Burbank warns that a hard landing there could spark a global recession...

“The downside scenario for China seems more intimidating than ever before,” billionaire Dan Loeb wrote on Oct. 30 to investors at Third Point.

Saturday, 21 November 2015

Stocks rise heading into jolly season

Despite all the anguish following the Paris attack last week, US stocks ended this week on a positive note.

The S&P 500 rose 0.4 percent on Friday to finish the week up 3.3 percent, the best weekly performance in 2015.

The STOXX Europe 600 also rose 3.3 percent this week after edging up 0.2 percent on Friday.

The advance this week sets the stock market up for what could be a jolly season:

According to analytics service Kensho, in the last ten years, the S&P 500 has averaged a gain of 1.9 percent in the week of Thanksgiving, ending positive six times.

Friday, 20 November 2015

Markets mixed, China lowers rates as debt rises

Markets were mixed on Thursday.

After jumping 1.6 percent on Wednesday for its biggest gain in four weeks, the S&P 500 slipped 0.1 percent on Thursday, weighed down by a 1.5 percent fall in the health-care sector.

Elsewhere, though, stocks rose. The STOXX Europe 600 rose 0.4 percent and the Shanghai Composite Index jumped 1.4 percent.

Chinese stocks could see further gains going forward after the People's Bank of China announced on Thursday that it would lower short-term borrowing costs for smaller banks.

However, Chinese borrowers may already be addicted to cheap loans. The amount of loans, bonds and shadow finance arranged to cover interest payments will probably rise 5 percent this year to a record 7.6 trillion yuan, according to Beijing-based Hua Chuang Securities.

“We will see more defaults and rising bad loans in the financial system,” said Zhou Hao, a senior economist at Commerzbank AG in Singapore.

That could spell trouble for the Chinese economy and, in turn, the world eonomy. According to Oxford Economics, world growth would "slow sharply" if China's economy experiences a hard landing.