Saturday, 29 July 2017

Markets fall as low volatility seen signalling top

Markets fell on Friday.

The S&P 500 slipped 0.1 percent, the STOXX Euroipe 600 tumbled 1.1 percent and Japan's Topix fell 0.4 percent.

“Investors are becoming increasingly wary over the historically low volatility levels, with a host of key economic data coming out in the U.S.,” said Hideyuki Ishiguro, a senior strategist at Daiwa Securities Co.

Jeffrey Gundlach's DoubleLine Capital purchased some five-month put options on the S&P 500 recently.

Gundlach explained that the CBOE Volatility Index had been “really, really low”, and the trade was “like free money”.

Indeed, CNBC reported there is “more concern that the surge in stocks is running out of steam and a top is near”.

While equity funds took in $9.9 billion over the past week, the seventh straight week of inflows, Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, suggested that the pattern is now “becoming more consistent with [an] autumn top in risk assets”.

However, some analysts remain bullish.

Andrew Adams, an analyst at Raymond James, said that the current bull market has been relatively “lackluster” compared to bull markets of the past and said that “it's wrong to assume it has to end in spectacular fashion from current levels”.

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