Tuesday, 17 January 2017

Stocks fall with pound but sterling “might be close to floor”

Stocks fell on Monday, as did sterling, amid concerns that UK Prime Minister Theresa May is prepared to lead Britain out of the European Union’s single market.

The STOXX Europe 600 fell 0.9 percent. The British pound fell 1.1 percent lower to US$1.2052 after touching US$1.1986, its weakest level since October.

“Markets are trading in risk aversion mode,” said Neil Jones, the head of hedge-fund sales at Mizuho Bank in London.

Earlier in Asia, the Nikkei 225 fell 1.0 percent.

Nothwithstanding the fall on Monday, Marcus Ashworth at Bloomberg thinks that sterling can survive Britain's exit from the European Union.

“Monday saw the pound dip to its weakest versus the euro since November and fall briefly below $1.20, the lowest level since the Oct. 7 flash crash,” he wrote. “If this constitutes the bulk of the hard Brexit news, we just might be close to the floor for sterling versus the euro.”

Monday, 16 January 2017

Shenzhen index plunges

Stocks fell in China, with the country's second-largest equity market plunging the most in 10 months, although a rebound late in the day limited losses.

Bloomberg reports:

The Shenzhen Composite Index sank as much as 6.1 percent, the biggest loss since Feb. 29, with at least 80 stocks falling by the 10 percent daily limit. The Shanghai Composite Index dropped as much as 2.2 percent in minutes before paring losses...

The Shenzhen gauge trimmed declines to 3.6 percent at 2:56 p.m. local time, while the Shanghai Composite was down 0.4 percent in a fifth day of losses -- its longest losing streak since August 2015.

The report added that the Shenzhen index has lost 11 percent since foreign investors were allowed to buy the city’s shares through an exchange link with Hong Kong last month.

Saturday, 14 January 2017

Stocks rise amid sign investors bracing for downturn

Stocks mostly rose on Friday.

The S&P 500 rose 0.2 percent, the STOXX Europe 600 rose 1.0 percent and the Nikkei 225 rose 0.8 percent.

However, the Shanghai Composite Index fell 0.2 percent after China reported that its exports fell in December from a year earlier. The Shenzhen index fell a hefty 1.6 percent.

Oil also fell. West Texas Intermediate crude fell 1.2 percent while Brent fell 1.0 percent.

Despite the gain on Friday, US stocks finished the week down 0.1 percent.

A MarketWatch report sees worrying signs for the market ahead.

It cites Bespoke Investing Group in saying that the most heavily shorted stocks have not taken part in the stock market rally so far. According to Bespoke, this goes against the usual trend in rising markets, and suggests a cause for concern for the broader market.

Another MarketWatch report notes that demand for one-month call options tied to the CBOE Volatility Index has spiked in the past week, a sign that some are bracing for a sharp downturn following the inauguration of President-elect Donald Trump.

Friday, 13 January 2017

Markets fall amid fear gains could unravel "very quickly"

Markets fell on Thursday.

The S&P 500 fell 0.2 percent, the STOXX Europe 600 fell 0.7 percent and the Nikkei 225 fell 1.2 percent.

Michael McCarthy, Sydney-based chief market strategist at CMC Markets, said: “There is a growing fear that recent positive moves are based on bombast, and could unravel very quickly.”

Indeed, Vanguard founder Jack Bogle told CNBC on Thursday that while US president-elect Donald Trump's proposals may be bullish for stocks in the near term, they are “bad for society”, the market and the economy in the long term.

In contrast, Kevin Marder at MarketWatch thinks that there are more gains ahead for the stock market.

Thursday, 12 January 2017

Markets rise but drug stocks hit by Trump call

Markets rose on Wednesday.

The S&P 500 rose 0.3 percent despite a hit to health-care stocks after President-elect Donald Trump said at a press conference that he would force price bidding for drugs.

The STOXX Europe 600 rose 0.2 percent and the Nikkei 225 rose 0.3 percent.

While Trump's comments on drug pricing primarily hurt health-care stocks on Wednesday but left the rest of the US stock market relatively unscathed, the US dollar fell.

Analysts at Westpac noted that the lack of clarity provided on future fiscal policies suggests that “markets arguably priced in too much reflation without any solid policy detail”.

Indeed, Thomas H Kee Jr, founder of Stock Traders Daily, thinks that the stock market has reacted prematurely to the potential benefits of Trump's policies and that a decline of 5-7 percent may begin “almost immediately”.

Wednesday, 11 January 2017

US stocks unchanged amid diverging projections

Markets were mixed on Tuesday.

The S&P 500 closed unchanged, the STOXX Europe 600 edged up 0.1 percent and the Nikkei 225 fell 0.8 percent.

Oil fell. West Texas Intermediate crude fell 2.2 percent while Brent fell 2.4 percent.

US Treasuries were little-changed on Tuesday, with the 10-year yield at 2.378 percent.

However, DoubleLine Capital chief executive Jeffrey Gundlach warned on Tuesday that there will be “trouble for equity markets” if the 10-year Treasury yield moves beyond 3 percent.

Gundlach expects markets to reverse their post-election moves, as does Larry Summers, who described the market rally since Election Day as a “sugar high”.

In contrast, Steve Grasso thinks that there is a “tremendous runway for stocks to move higher”.