Awkward timing or diverging strategies?
As the WHO reverses engines on their previous guidance around lockdowns, the UK today is set for further localised implementations to stem the exponential rise of the virus. The North is set to bear the brunt of most of the new lockdown restrictions, with Liverpool set to be placed in the strictest of the new three-tiered classification system.
I must say it is odd to think we are already halfway through September. With the end of Q3 coming into view, this month has thrown up some interesting changes to our clients’ focus. For one, the consistently busy Capital Goods sector of the past few months has seen much less activity. Most of this activity has resurfaced amongst the Consumer Discretionary and Financial names.
Our weekly webinar aims to give you a whistle-stop tour of our current chart views.
The seasonally quiet month of August did manage to throw up some interesting moves amongst Hedge Funds and Institutions. Here at Redburn we saw a significant increase in two-way flow around the Housebuilder/Building Materials names, to the extent that it outstripped Capital Goods flow, which has been consistently the largest of late. Hedge Fund selling of Utilities has cooled, while Banks failed to maintain their July momentum, with falling interest across the board.
After wrestling with a poor open European equities have managed turn it around trade back close to flat on the day. A two-year closing high by the SHCOMP helped the cause, while Yuan closed at its strongest level since late January.
12507 QUOTE OF THE DAY “This will devastate us. People don’t travel to Spain any more just for sun and beaches.” Antonio Gomez of the SpainTOP travel agency in Madrid, on the closure of nightclubs. KEY INDEX MOVES Stoxx50 FTSE DAX FTSEMIB ▲ +0.3% ▲ +0.7% ▲ +0.4% ▼ -0.2% Basic Res. Tech Telecoms […]
Quel dommage!
European equities have taken a body shot from the British government overnight as they announced plans to impose quarantine restrictions on France and Holland early tomorrow morning. Travel & Leisure names have led the region lower, with all sectors trading in the red. Volumes are up almost 35% against yesterday, but before getting too concerned that’s compared to almost non-existent participation. In a wider context, European volumes are still down 15% vs their 20d AVAT, so not exactly a crowning achievement.
Two steps forward, one step back certainly the feeling of the day.
Volumes are proving pretty diabolical across the board, as the Value rotation splutters. Indices in Europe are all trading lower, but to be honest it feels more like a pause for breath than anything else. The dollar has resumed its weakness, while investors, in the absence of much else to do, have added to the long gold trade.
Before the ‘A-ha’s’ and the ‘Told-you-so’s’ can get an word in, the US’ small sell-off into the close last night actually reinforces a lot of what we were saying yesterday. It was Tech that soured late into the session, with the Nasdaq down almost 2%, while Value was again the outperformer. We are not going to get too far ahead of ourselves though, because the stark reality is that US Value is still about 1% away from a one month-relative high. Plenty of room to go before we get into the realms of a full blown rotation.
I’ve just got back to the desk after a week off, and I must say things are looking a lot rosier than when I left. While away, my holiday reading, aside of course from some of our brilliant research notes, was Matt Ridley’s The Rational Optimist. It’s a great read, and I would strongly suggest to those in need of a little hope in what has been a fairly bleak year. As I settle back down in front of the screens and write today’s missive, I must say there is actually quite a lot to be ‘rationally optimistic’ about, long may it last!