I can’t help but draw a comparison between the market these past days and the bumpy journey waiting for the cricket ball in England’s upcoming test vs the West Indies. It’s going to get thrown in all directions, probably rained on, pounded into the ground and smashed beyond the boundary into the stands (causing sadness and happiness depending on your side). By the time day-5 comes, pause for breath, because next week we will do it all again!
After a few days of discussing market positioning and factor rotations (what bliss!), COVID and the hope of a possible vaccine has bullied its way back into the spotlight.
As I’ve occasionally been known to exclaim on the desk…Holy Moly! So much to talk about all of a sudden but, unfortunately, not much of it positive. The Nasdaq clearly the main story – it rallied 2% to make a new all time high and then closed down -2% overnight. The last time this happened was in March 2000 (I was 6 and probably learning how to ride a bicycle back then!) so lots of people debating whether this is the beginning of a summer rotation? Plenty of moves showing us a parallel with the Dotcom crash of 2000 (Tesla up +50% in the past 10 days – irrational exuberance anyone?) and although our charts team conclude it is too soon to call it, this is something that we will be watching closely in the next couple of weeks. Summer time is always a tricky time for a major change in market themes hence lots of nervousness (or even excitement?) around it today.
Well someone out there definitely likes Mondays. A very similar start to the week as we saw last Monday with markets around the world better bid. Again China led the way (CSI 300 made a new 5year high – see chart below). Again though, not huge amounts of conviction to the move. Volumes quickly faded as the market drifted and are running at c10% lower than Friday and down 25% on the 20 day average. EU indices remain in the well-established ranges and Germany remain the winner – the Dax making a new all-time high vs the SXXE this morning.
34803 QUOTE OF THE DAY “The large, and in some countries, accelerating number of Covid-19 cases is a disturbing reminder that the pandemic is not under control and the risk to our market outlook is almost certainly to the downside” The IEA captures the mood of markets in its monthly report KEY INDEX MOVES […]
34803 QUOTE OF THE DAY “You don’t need to work in Europe, or the US or Latin America if you can come here and work for a couple months at a time; go back and come back.” Barbados Prime Minister (Mia Mottley) as she is considering to allow foreigners to live in the island for […]
Ahhhh Rishi Sunak. He’s great isn’t he? We all need a Rishi right now. He settles nerves. He tells us it’s all going to be okay. He buys me dinner Monday to Wednesday (sort of). Today has been all about the Summer statement where as expected, a 9 month stamp duty holiday is the big news for the UK housebuilders. We were actually expecting it to run for 6 months so an extra 3 months always welcomed. He also announced a furlough bonus and most importantly a 50% discount for eating out from Mon- Wed. Yup, 50% off! It is only up to £10 per person but it will do. Not quite sure how it tallies with Boris’s plans to tackle the obesity crisis but there we go.
A good day for the deep-dive report you’ve been meaning to read today. Investors taking a pause for breath ahead of Q2 results, which is probably not the worst idea. Perfect time to see were we currently stand market wise and revisit some ideas. Volumes are lower across the board but, interestingly, the theme continues – higher volumes on up days, lower volumes on down days. EU equities have been ticking lower since the open but, overall, we are still watching June’s highs as the key resistance levels (12913 on DAX, 20399 on FTSE MIB and 3394 on SX5E).
After a great weekend (involving the first restaurant visit in months for many of us), markets started with a heavy risk-on tone. It all began with China having a bouyant session after a clear effort by the Govt there to encourage moves higher. The CSI 300 made a 5 year high, HSI traded above its 200dma and the Shanghai Composite made a 2 year high after it broke the resistance level of 3288 (April 2019 high). Here in Europe, equities followed (SXXP +1.3%) and encouragingly, once again on healthy volumes. Cyclicals are back outperforming defensives and Spanish names seem to be on trend (Ibex currently up +2.2% vs peers all below +1.8% and the only index trading above its 10d AVAT).
What’s that saying? A watched pot never boils? With investors eagerly awaiting the prospect of a long weekend (and pubs reopening!) today’s morning session felt like it dragged on for ever. Interestingly, while it may seem like things were slow from the comfort of the WFH desk, volumes are actually telling us a different story. Through the morning we saw a decent amount of futures positioning ahead of the US data. For reference, EU indices are currently trading up +33% vs yesterday’s volumes (albeit down -13% vs the last 20 days). As per yesterday the volume seems to be coming on upticks. Liquidity overall remains underwhelming though as thoughts turn to BBQ’s.