Archives of “Global Indices” category

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Stock-market fever grips China

  
Analysis, Global Indices

Wild move in Chinese stock markets

Wild move in Chinese stock markets
What to make of the nearly 14% rally in the Shanghai Composite in the past five days?
We’ve seen parabolic moves in individual stocks for months but this is a parabolic move in an entire index and it’s extreme even by Chinese standards.
This looks like a mania stoked by Chinese media cheerleading. State-owned Shanghai Securities News ran a story on Friday titled “Hahahahaha! The signs of a bull market are more and more clear.” The China Securities Journal also talked up the market.
The volumes have been massive on this upmove and many are pointing to 2014-2015 when state media cheerleading led to a spectacular rally in stocks.
China 2015
Bloomberg data shows margin loans in China at the highest since 2015.
The ability of stock to rally everywhere despite the economic threats from the virus highlight the opportunity for a summer melt-up everywhere.

The China bull is stoking the risk-on mood in markets

  
Analysis, Global Indices

Chinese state media is pushing the narrative that a bull market is here

CSI 300

China equities are trading well higher on the day so far, with both the CSI 300 and the Shanghai Composite posting gains of over 4% currently.

What is even more impressive is that trading volumes are surging, with daily turnover exceeding ¥1 trillion on Thursday and Friday last week – and likely to exceed that mark once again today. That represents a sign of surging risk appetite.
This comes on the back of news that  China International Capital Corp. is forecasting the stock market to double in the next 5-10 years while the Securities Times’ said a “healthy” bull market is now more important to the economy than ever.
Frankly speaking, China trying to “guide” asset prices towards one direction isn’t anything new and any state media narrative is often a strong hint of what local authorities are willing to do in order to support said narrative to turn it into reality.
Of note, Bloomberg highlights that the number of mainland commentaries and retweets containing the term “bull market” over the weekend was more than 10 times the average that is seen over the past 90 days, according to the Baidu index.
That’s pretty much all investors need so long as state media and local authorities are also pushing the same narrative, reaffirming the technical breakouts since last week.
While China is continuing to signal that they have moved on from the coronavirus, the more bullish tone is feeding into risk-on sentiment across markets today. However, coronavirus developments elsewhere are less than ideal or convincing.
Sure, the sheer exuberance could override fears for a day or two but it won’t change the fact that we are still likely to see more pessimistic news over the next few weeks on virus developments elsewhere – especially the US – unless something changes.
It’ll be interesting to see how the market decides to interpret that version of reality when push comes to shove.
For today, look out for the S&P 500 as futures (up by over 1%) are pointing towards the cash market testing key daily resistance at 3,153 to 3,155 once again:
SPX

Maj. European indices end the session lower but well off intraday low levels

  
Analysis, Global Indices

German DAX, -0.4%. France’s CAC, -0.26%

The major European stock indices are ending the session lower. However the closes are well off intraday low levels.  A look at the closing levels are showing:

  • German DAX, -0.41%
  • France’s CAC, -0.27%
  • UK’s FTSE 100, -0.16%
  • Spain’s Ibex, -0.19%
  • Italy’s FTSE MIB, -0.44%
  • Portugal’s PSI 20, -0.93%

German DAX, -0.4%. France's CAC, -0.26%_

In the European and 10 year note sector, yields are higher with Germany leading the way at a 6.0 basis point gain in the benchmark 10 year yield.
European yields are higher with German 10 year yield up 6.0 basis pointsIn other markets:
  • spot gold is trading down $-15.75 or -0.89% at $1765.14
  • WTI crude oil futures are trading up $0.53 or 1.38% at $39.81. The high price reached $40.58. The low price extended to $39.05
in the forex market, the US dollar has moved lower in the New York session but the CAD is the weakest of the majors. The GBP and JPY are the strongest. The GBPUSD is moving above its 100 day moving average at 1.2464 level and the 50% retracement of the move down from the December 2019 high at 1.2461. The GBPUSD is currently trading at 1.2469..

European shares end the session with mixed results

  
Analysis, Global Indices

German Dax up 0.9%. UK’s FTSE -0.6%. France’s CAC unchanged

The European major indices are ending the session with mixed results. The German DAX is higher. The France’s CAC is unchanged. The UK’s FTSE is lower.

A look at the provisional closes are showing:
  • German DAX, -0.9%
  • France’s CAC, unchanged
  • UK’s FTSE 100, -0.6%
  • Spain’s Ibex, -0.8%
  • Italy’s FTSE MIB, -0.3%
In the European debt market, the yields were lower across the board earlier in the day. However the German, France, and UK yields have since moved back into positive territory and are closing near the high yield for the day.
German Dax up 0.9%. UK's FTSE -0.6%. France's CAC unchanged_

Eurostoxx futures -0.8% in early European trading

  
Analysis, Global Indices

Softer tones observed in early trades

  • German DAX futures -0.8%
  • UK FTSE futures -1.1%
  • Spanish IBEX futures -2.0%
This is mainly a continuation from the moves towards the closing stages of last week, with virus fears prompting jitters and led to a sharper fall in US indices on Friday. The softer mood in Asia also isn’t really helping to start the week.
Elsewhere, US futures are also keeping slightly softer for now. S&P 500 and Dow futures are both down 0.3%, having kept near flat levels in the past two hours.
The risk bias is slightly tilted towards the more defensive side but we’ll have to see what the virus headlines later today will offer.
As a reminder, the bears edged out a victory towards the end of last week if you were to view the S&P 500 as one of the key gauges of risk:
SPX
Let’s see if they can keep that momentum going later today. If so, the current patch of dollar weakness to start the session may not stay the course.

Nikkei 225 closes lower by 2.30% at 21,995.04

  
Analysis, Global Indices

Asian equities slump to start the week

Nikkei 29-06

This follows the softer mood from US trading at the end of last week, where we saw the S&P 500 closing below its 200-day moving average. US futures are also looking more tepid to start the session, with E-minis keeping closer to flat levels now.

The Hang Seng is down by 1.4% while the Shanghai Composite is currently down by 0.7% after returning from a longer break since Thursday.
In the major currencies space, the dollar is the weakest performer so far as it is giving back some gains since trading late last week. EUR/USD is up from 1.1220 to 1.1250 with AUD/USD a little higher by 0.2% at 0.6880 at the moment.
That said, we may be in for a more choppy session considering the risk mood so just be wary of that as we navigate through European trading today.

Major European shares tumble on “risk off” trading flows

  
Analysis, Global Indices

German DAX down -3.43%%. France’s CAC, -2.92%

The European shares tumbled in trading today as global risk concerns are elevated.

The major indices are all closing at session lows led by the German DAX which fell -3.43%
A look at the closing levels shows:
  • German DAX, -3.43%
  • France’s CAC, -2.92%
  • UK’s FTSE -3.11%
  • Spain’s Ibex, -3.15%
  • Italy’s FTSE MIB -3.42%
German DAX down -3.43%%. France's CAC, -2.92%The US shares are also currently trading at session lows with the Dow industrial average leading the way to the downside with a -3.08% decline.
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