Archives of “Standard & Poor’s” tag

rss

US stocks tumble. Major indices have worst day since June (for S&P and Dow) and March (for Nasdaq)

  
Analysis, US Market
#  #  #  #  #  #  #  #

Dow Jones falls -1025 points at its lows

The major indices are closing sharply lower. The major indices declines were the sharpest since June for the S&P and Dow.

For the NASDAQ, you have to go all the way back to March to have a worse trading day.

The Dow industrial average is now back negative in 2020. The declines snaps the S&P and NASDAQ 4 day winning streak. All 11 sectors of the S&P closed lower.
The final numbers are showing:
  • The S&P index fell 125.92 points or -3.52% at 3454.92. S&P index fell -4.28% at its lows
  • The NASDAQ index fell -598.34 points or -4.96% at 11,458.16. NASDAQ index fell -5.77% its lows
  • The Dow fell -808.50 points or -2.78% at 28292.33. Dow industrial average fell -3.52% at its lows

Moody’s affirms USA credit rating at Aaa, outlook stable

  
Analysis, Economy
#  #  #  #  #  #  #  #

Moody’s not interested in a lawsuit

Print all you like, spend all you like. No one is downgrading the USA after S&P did and the government sued them for $1.5B for mortgages. Even the company knew what it was all about.
At the same time, a country that prints its own money can’t default. But they can devalue.

Fitch downgrades Italy to BBB-, stable outlook

  
  Analysis
#  #  #  #  #  #  #  #

Fitch Ratings agency says the downgrade reflects the significant impact of the COVID-19 pandemic on Italy’s economy and fiscal position

  • expects Italy’s govmt debt to GDP ratio to increase this year, by around 20%
  • Fitch forecasts an 8% GDP contraction in 2020
  • says Italy’s gross general government debt to GDP ratio will increase by around 20pp this year
  • stable outlook partly reflects view that ECB’s net asset purchases will facilitate Italy’s substantial fiscal response to covid-19 pandemic
  • downward pressure on Italy’s rating could resume if government does not implement credible economic growth & fiscal strategy
  •  says recession & economic policy response to covid-19 pandemic will result in sizeable deterioration of Italy’s budget balance this year
This is a negative input for euro
Link to Fitch for more … note this:
  • In accordance with Fitch’s policies, the issuer appealed and provided additional information to Fitch that resulted in a rating action that is different than the original rating committee outcome.
Huh … reading between the lines on this it could have been a worse outcome for Italy?
—
Note – S&P recently affirmed Italy at BBB/A-2 with an outlook negative.
And – the ECB will still accept Italy debt as collateral given their recent changes to accept debt which was eligible on April 7th.

S&P cut Australia to AAA negative

  
  Analysis
#  #  #  #  #  #  #  #

S&P cut Australia outlook to negative from stable

Rating is AAA still.
This is not wholly unexpected from S&P
AUD down a few pips on the announcement
S&P cite:
  • reflects substantial deterioration of Australia’s fiscal headroom
More:
  • large Australian budget deficits likely to be temporary
  • virus a severe economic c and fiscal shock
  • government deficit to average 7.5% of GDP in 20/21
  • annual growth to fall to 1.3% in FY 2020

S&P affirms US rating at AA+, outlook stable

  
  Analysis
#  #  #  #

Is there a “too big to downgrade” rating?

Especially in the current global predicament
S&P ratings
  • US rating is constrained by high government debt and fiscal deficits, both are likely to worsen this year after the coronavirus shock
‘likely’ to worsen??? Nothing unlikely about it.
More:
  • expect US economic recovery in 2021, which will partly compensate for loss of output this year, then continued GDP growth afterwards
  • expects general government deficit to fal;l below 5% of GDP by 2022
  • expects the US economy to contract around 1.3% in 2020
  • recovering by 3.2% in 2021
  • 2.5% in 2022

S&P says coronavirus outbreak will cut 0.5% from Australia’s real GDP growth in 2020

  
Analysis, Economy
#  #  #  #  #  #  #  #

The ratings agency a bit downbeat on Australia’s GDP, but on the bright side:

  • S&P says economic impact of coronavirus unlikely to negatively affect Australia’s sovereign rating
  • says short, temporary delay in balancing government budget unlikely to strain Australia’s creditworthiness

Stock indices end lower. All S&P sectors close lower on the day

  
Analysis, US Market
#  #  #  #  #  #  #

Late day selling hurts major indices

Some late day selling has pushed the major indices into the red.  All the S&P sectors are closing lower on the day.
The final numbers are showing:
  • S&P index -9.13 points or -0.28% to 3237.15. The high reached 3244.91.The low extended to 3232.43
  • NASDAQ index fell -2.883 points or -0.03% to 9068.58. The high reached 9091.93. The low extended to 9042.55
  • Dow fell -119.97 points or -0.42% to 28583.43. The high reached 28685.50. The low extended to 28565.28.

Moodys Downgrades UK Outlook To Negative On “Brexit Paralysis”

  
Analysis, Economy
#  #  #  #  #  #  #  #  #  #

Moody’s downgraded its outlook on Britain’s debt (currently rated Aa2) to negative from stable after the market close on Friday, saying Brexit had been a catalyst for an erosion in the country’s institutional strength, perceived “material deterioration” in UK governance, and that the country’s ability to set policy has weakened in the Brexit era along with its commitment to fiscal discipline.

The outlook cut represents a catch down to its competitors: the UK is currently rated AA by S&P and AA- at Fitch Ratings, with both companies having the UK on negative watch.

“It would be optimistic to assume that the previously cohesive, predictable approach to legislation and policymaking in the UK will return once Brexit is no longer a contentious issue, however that is achieved,” the ratings agency said adding that “the increasing inertia and, at times, paralysis that has characterized the Brexit-era policymaking process has illustrated how the capability and predictability that has traditionally distinguished the U.K.’s institutional framework has diminished.”

“The decline in institutional strength appears to Moody’s to be structural in nature and likely to survive Brexit given the deep divisions within society and the country’s political landscape,” Moody’s added.

The decision to put the UK on negative outlook even as Moody’s affirmed Britain’s Aa2 long-term issuer and senior unsecured ratings comes one month before an election that is likely to determine the future of Brexit. While the election will have a big impact on Brexit, this week has seen both sides escalate their spending pledges, drawing election battle lines with plans to end a decade of U.K. austerity. (more…)

“Markets Will Fluctuate”

  
Analysis, Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

In the 1927 book “Security Speculation – The Dazzling Adventure,” Laurence H. Sloan repeated the now famous anecdote 1  about J.P.Morgan’s view of the stock markets:

History has it that young man once found himself in the immediate presence of the late Mr. J. P. Morgan. Seeking to improve the golden moment, he ventured to inquire Mr. Morgan’s opinion as to the future course of the stock market. The alleged reply has become classic: “Young man, I believe the market is going to fluctuate.

Fluctuate indeed.

That simple truism seems to been lost to some folks, who were taken aback by yesterday’s market decline. The Dow Jones Industrial Average fell 274 points, but that sounds worse than it is; in percentage terms the retreat amounted to 1.24 percent. The Standard & Poor’s 500 Index fell 38.1 points, or 1.54 percent; the Russell 2000 Index of small cap companies fell 1.78 percent (24.6 points) while the Nasdaq Composite Index had a 1.94 percent (123.2 point) fall.

As Bloomberg News noted, “Evidence is building that the market’s long stretch of tranquility is breaking. The S&P 500 swung at least 1 percent in three of the last six sessions after spending the previous three weeks without a move of more than 0.3 percent.”

The collective question investors are asking is “Why here and now?” It is tempting, and probably correct, to simply declare this the well-known random walk of markets. But rather than leave it at that, let us turn a critical eye to some of the explanations that were circulating. Here they are from least convincing to most . . .

Continues at: The Real Reason Markets Swooned Yesterday

Go to top