Tuesday 27 August 2019

Markets mixed amid signs of waning confidence

Markets were mixed on Monday.

The S&P 500 rose 1.1 percent, the STOXX Europe 600 was flat and the Nikkei 225 plunged 2.2 percent.

US President Donald Trump said on Monday that negotiations with China would begin again after the US received two “very good calls” from Beijing.

Economic data on Monday pointed to further slowing of economic growth.

US durable goods orders rose 2.1 percent in July but fell 0.4 percent when transport items are excluded.

The Chicago Fed National Activity Index fell to -0.36 in July from 0.03 in June.

In Germany, the Ifo business confidence index fell to 94.3 in August, its weakest level since November 2012, from 95.7 in July.

Confidence in corporate America may also be declining.

According to TrimTabs Investment Research, corporate insiders have sold an average of US$600 million of stock per day in August. This puts August on track to be the fifth month of the year in which insider selling tops US$10 billion. TrimTabs said that the only other times that has happened was 2006 and 2007, the period before the last bear market in stocks.

"It signals a lack of confidence," said Winston Chua, an analyst at TrimTabs. "When insiders sell, it's a sign they believe valuations are high and it's a good time to be outside the market."

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