Economic data flow has been relatively light overnight, but activity on financial markets is especially rife. It’s begun with the bond market – not in Europe this time, but in the booming United States. There doesn’t appear to be a discernible flashpoint that’s sparked this, but nevertheless and for whatever reason, bond traders have hit the sell button on US Treasuries. The phenomenon can be witnessed across the curve, with US 2 Year Treasury yields climbing to levels not seen since 2008 at 2.8
Expected index adjustments
Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 8 Oct 2018. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video.
NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a cash neutral ad
It Can Be Difficult to Measure Complex Issues Like Trade Wars
When dealing with a complex fundamental theme – without a binary outcome, numerous inputs and important to different investors for different reasons – it can be difficult to both analyze and trade the subject. Those are certainly criteria that would fit the ongoing trade war. It is proving exceptionally difficult to keep a clear bead on the progress of the economic conflict and the market has started to veer back into its comfort
It’s likely global markets will sway to begin the week, in a bid to find some semblance of equanimity following a raucous week. The international bond rout will be the essential force underpinning price action, with other markets and asset classes to take cues from there. Anxieties regarding trade wars and global growth will probably become more present too, as Chinese traders return from holiday, adding a layer of uncertainty on-top of increasingly volatile fundamentals. The shaky sentiment wil
Asia stocks at 17-month low as China lets yuan slip. China’s central bank fixed its yuan at 6.9019 per dollar on Tuesday.
Dow: After 3-day downtrend and a drop of 200 points the Dow rises for the first time.
Sovereign debt markets were calmer overnight whilst the 10 yr US Treasury maintained its 7 and a half year high.
Oil prices are steady but up 0.6% after a late boost on Monday. Supply side shortages from Iranian sanctions claims the move.
Google bug caused Shares
The growth-versus-risk paradigm shifted further in favour of the latter in the last 24 hours, as a multitude of stories compounded the bearish sentiment mounting in global markets. Though Chinese markets were more stable yesterday, an IMF report downgrading global growth forecasts for the first time since 2016 reinforced the possible growth-sapping impacts of the unfolding US-China trade war. Risks in Europe piqued again, following renewed inflammation of tensions between the Italian government
MSCI All-Country Index, which tracks shares in 47 countries, hit the lowest level since August '16 overnight
Crude hovers above $74 a barrel on concerns Hurricane Michael in the US may affect supply
USD down as it does not keep pace with SGD. Trump comments that FED is moving rates too quickly
Iron Ore Benchmark breaks back into $70s amid speculation over further stimulus from Chinese policymakers
Trump accepted the resignation of Nikki Haley as US ambassador to UN. C
Volatility is up, and risk appetite has been dulled. The VIX traded towards the 22 figure overnight, while currency safe havens such as the Yen were sought amid a somewhat remarkable sell-off across global equities during the European and North American sessions. It’s a matter of markets continuing to adjust to a world of higher interest rates and US Treasury yields – coupled with the expected panic when prices recalibrate to evolving fundamentals. A strong enough argument can be made that we ar
US sees largest market fall in 8 months with the Dow Jones losing over 800 points in the main session.
Asian markets followed suit with both Tokyo and Hong Kong down over 3%. The Taiwanese index was down 6% with the MSCI Asia Pacific average coming in at an average loss of 3.5% for the region
The tech sector saw the biggest losses yesterday with FANG companies losing between 4-9%
Oil saw its biggest 2 day loss since July as supply concerns continue. The US are set to anno
What happened? The sell-off continues, and despite a brief pause during Wall Street trade that opened hopes of an end to this rout, it was quickly dashed as investors went back to dumping stocks. The chaos that has ensued in the last 24 hours raised myriad of questions. But the first one is inevitably this: why did that happen? In short: there’s not a clear answer. That isn’t to say that there isn’t reasoning behind the sell-off; on the contrary, there’s plenty to explain it. Rather, it’s a matt
The Dow Jones continues its tumble, losing more than 1,300 in two days, as worries over interest rates and trade barriers continue.
The S&P dropped 2%, bringing its October losses to 6%
The sell off in the US also saw sell offs in Europe, with FTSE down 1.9%, DAX 1.3%, CAC 1.8% and EU STOXX 1.95%.
The VIX rose almost 9%, reaching it’s highest levels since February this year
Despite rising interest rates and a booming economy, bank stocks are trading lower, reachi
Risk Trends Trembles, Is it the ‘Crazy’ Fed’s Fault
Market’s suffered a painful correction this past week. From peak-to-trough, the benchmark I like to refer to as a measure of hold-out enthusiasm, the S&P 500, dropped nearly 8 percent. That is still a ways from the technical ‘bear market’ designation which is a 20 percent correction from peak highs, but that scale of loss from a seemingly indefatigable climber rattles confidence. To be clear, the slump in sentiment was not isolated to
Rout over? There are tentative signs that the global equity rout witnessed last week has subsided, at least for now. The tone shifted during Asian trade on Friday, and despite a weak day for European markets, Wall Street ended the week on a positive note, led by a bounce in the major tech stocks. It’s not to say that there isn’t the risk that this sell-off may not continue at some stage this week: in fact, futures markets are indicating a sluggish start for Asia today. More to the point, the fun
Expected index adjustments
Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 15 Oct 2018. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video.
NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a cash neutral a
IMF Managing Director Christine Lagarde commented that U.S. stock valuations have been “extremely high”, possibly implying a correction. On a similar line, U.S. Treasury Secretary Steven Mnuchin insisted that the stock sell-off wasn’t “surprising”, while insisting that U.S. fundamentals remain strong. Lagarde also advised to be ready for more market volatility
During IMF U.S.-China trade tension was cited as a major reason for cutting its outlook for global growth.
Intense Brexit t
This week sees Brexit negotiations between the UK and EU come to the forefront once more. IG's own Sara Walker will be joined by Nick Cawley from Daily FX and Simon French, Chief Economist to UK merchant bank Panmure Gordon, to discuss how the meetings outcome could affect the FX market.
The second #IGForexChat
You can join us on Thursday 18 October at 6.30pm (BST) live on IGTV to get involved with the conversation. Submit your questions directly to the panel by adding your questions
The music entertainment arm of Tencent, which has 800 million users across a variety of platforms in China, had originally planned to go public in the United States imminently. The IPO was initially set to launch as soon as this week but has now reportedly been delayed because of the recent global sell-off. It is not the first company to pull out or postpone an IPO in the recent weeks, and whilst Tencent have declined to comment on the decision, it’s likely to be on the back of volatility seen i
Hurricane Michael is already regarded as one of the strongest hurricanes ever to hit US. The worst hit areas of Florida’s northwest coast saw significant damage to residential property, along with President Trump authorizing FEMA to step in and coordinate disaster efforts.
Even though the worst might have already passed, the 2018 North Atlantic hurricane season is likely to have sizable effect for the next seven weeks. The effect on the markets can be notable around this time, with the fol
Dead cat bounce in Asia? The ASX200 really couldn’t catch a bid yesterday. Most concerningly, it happened within a back drop of slightly higher volumes, showing that the sellers truly washed out the bulls throughout the day’s trade. The Asian region kicked-off the week sluggishly in general, unable and unwilling to run with the lead provided by Wall Street on Friday evening. The action in Asia prompted calls of a dead-cat bounce across global equities, something that has since been proven premat
U.K. monthly average earnings and monthly unemployment release today at 9:30 BST. Earnings forecast to be stable at 2.6% whilst the unemployment rate is forecast to be 4%. The releases could be an important signal to the current economic health of the UK.
The US federal budget deficit rose 17% to $779 billion in the 2018 fiscal year due to a surge in government spending.
EM currencies rallied to a 2-month high as the Turkish Lira leads the way, climbing as much as 2.1%. The Brazili
Wall Street: It's still early days, but investors appear to have regained their nerve overnight. The Asian session was tepid, to be sure, however a rally in European and US equities reveal a market that has found its appetite for equities again. As the existing narrative would imply, much of this was underpinned by a fresh appetite for rate-sensitive US big tech stocks, which according to the NASDAQ, rallied almost 3 per cent overnight, leading both the Dow Jones and S&P in the realms of 2 p
Trump announces that the Fed is his biggest threat as they are increasing rates ‘too quickly’
Theresa May is to visit Brussels for an EU summit today to agree on the terms of the UK-EU agreement, in order for a final decision to be made in November
Netflix quarterly results show yet another rise in new subscribers, signing up 6.96 million customers in this quarter, totaling a global amount of 137.1 million
Canada becomes the second country to legalise the use of Cannabis and
Fed minutes: The week’s blockbuster event dropped over night: the release of the FOMC’s Monetary Policy Minutes. Equity markets have staged a tentative turnaround globally this week, but it has all been occurring in the shadows of what could be gleaned from last night’s Fed minutes release. When all is weighed up, the document reaffirmed the Fed’s hawkishness, revealing in-depth discussions ranging from cutting the word “accommodative” from the central bank’s language, to debating the possible n
Following Brussels summit Theresa May hints the UK may consider longer transition period resulting in the UK remaining tied to the Euro bloc's rules for a period of 21 months after the exit day
Trump escalates economic confrontation with Beijing by announcing his intention to withdraw the US from China Shipping Treaty
Cannabis stocks slipped after Canada’s legalisation. Aurora Cannabis Inc posting a 15% slide shortly after market opened yesterday. Popular ETFs ETFMG Alternative Ha
Risk-off (again): Just when it looked like it was safe to jump back into financial markets, it was risk-off again overnight, as market participants dwelled once more on the myriad of risks facing them. There’s nothing entirely new in what has developed during the European and North American session: the same confluence of factors that has weighed on sentiment in markets have simply reared their head again. It’s probably what makes this situation all the graver, if not at the very least, highly g
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