Tag: Market Update

Market Turmoil Deepens After A Bunch Of Surprises!

The US Markets took a dive on Wednesday as the red wave of expected Republican gains in the midterm elections appeared more a slight pink. The news from the crypto sector was bad as Binance is seen increasingly unlikely to follow through on its takeover of FTX.com, and tomorrow we get the upcoming inflation data that will provide clues about the severity of future interest rate hikes.

Whilst Republicans were still favored to win control of the House of Representatives, key races were too close to call, with a better-than-expected showing by Democrats diminishing the prospect of a so-called red wave of Republican gains.

Major indexes added to declines as Treasury yields climbed further after a poor auction of 10-year notes by the U.S. Treasury. Treasury yields reversed and fell later in the day. The 10-year was last at 4.099, while the 2-year was at 4.5816. Traders are split over whether the Fed will raise rates by 50 basis points or 75 basis points in December.

In tech, Meta Platforms bucked the trend lower to rise more than 5% after the social media company detailed plans to cut more than 11,000 jobs or 13% of its workforce. The cost-cutting was welcomed by Wall Street amid frustrations about the company’s ongoing plan to invest in the metaverse.

Binance signed a non-binding agreement on Tuesday to buy FTX’s non-U.S. unit to help cover a “liquidity crunch” at the rival exchange, but the deal was subject to further due diligence.

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com,” Binance said in a statement.

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The Market Takes Another Dose Of Hopium…

The latest edition of our finance and property news digest with a distinctively Australian flavour. On Monday US Equity markets rose and the dollar slid, driven by the idea that China may ease COVID restrictions, the prospects of a GOP rise in the mid-terms and hopes the U.S. economy is slowing enough to allow the Federal Reserve to ease its aggressive hiking of interest rates.

While a divided Congress is typically viewed as good for markets, the hope the U.S. economy is losing enough momentum for the Fed to slow the pace of monetary tightening pushed the dollar lower, said Joe Manimbo, senior market analyst at Convera in Washington. “The market is really desperate for the Fed to pivot,” Manimbo said. “It will take anything it can get in terms of signs of a softening economy to hold out hope that a pivot might materialize sooner rather than later,” he said.

The relatively strong U.S. jobs report last week ensured the Fed will be in no rush to ease policy, though the pace of rate hikes may slow as the U.S. central banks keeps rates higher for longer, a view that pressured Treasury yields higher.

Go to the Walk The World Universe at https://walktheworld.com.au/

Operation Ricochet! [Podcast]

The latest edition of our finance and property news digest with a distinctively Australian flavour.

Ricochet is defined as a glancing rebound (as of a projectile off a flat surface). And in the markets, we are seeing that in spades at the moment.

So, in this week’s market review we will as normal start in the US, cross to Europe and Asia and end in Australia. But I want to stress how volatile things are, in a situation where good news is bad news, expectations of a recession or slow down are growing, and Central Banks are still generally talking interest rates higher.

Plus, as I discussed yesterday, there is a growing divergence between the RBA’s approach compared with other Central Banks, to the point where we risk higher rates for longer in a slowing economy, which is exposed not only to exchange rate risks, but also a slowing China.

The Dow gained Friday as investors mulled a mixed jobs report and speculation about China easing Covid-19 lockdown measures, but that wasn’t enough to prevent the marketfrom snapping a three-week win streak following the Fed’s rate hike this week.In fact, global shares rose on Friday and the U.S. dollar fell, after jobs data came in stronger than expected but also hinted at some slack in the tight American labor market,triggering again that hope that the Federal Reserve might ease up on monetary tightening –despite what was said just a day earlier about higher rates.

Data from the U.S. Bureau of Labor Statistics showed the economy generated 261,000 jobs in October. That was higher than an estimate of 200,000expected but it also showed unemployment rising to 3.7% from 3.5% in September while wage inflation dropped to 4.7% from 5% in the prior month.Average hourly earnings increased 0.4% after rising 0.3% in September, but the rise in wages slowed to 4.7% year-on-year in October after advancing 5.0% in September.The participation rate eased back a little to 62.2%.The stronger jobs report comes just ahead of fresh inflation data next week, which if continues to show inflation running hot would lift the prospect of another 75 basis point hike next month.

In Australia. Afterpay-owner Block led the Australian sharemarket higher on Friday after reporting a stronger-than-expected third quarter profit, causing its share price to leap 10.9 per cent to $97.03.

The S&P/ASX 200 added 0.5 per cent, or 34.6 points, to 6892.5 on Friday, lifting its weekly gain to 1.6 per cent. The broader All Ordinaries index added 0.6 per cent to 7089.3 on Friday.

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Operation Ricochet! [Podcast]
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Fed Signals Higher For Longer And Markets Crater!

As Central Bank Rate Fest rolls on from the RBA on Tuesday, as expected the FED lifted the US interest rate target by 75 basis points overnight and reaffirmed continued hikes ahead. Later tonight we will get the Bank of England announcement, which is also expected to hike big.

The Fed’s unanimous decision lifted the target for the benchmark federal funds rate to a range of 3.75% to 4%, its highest level since 2008. “Slower for longer,” declared JP Morgan Chase & Co, chief US economist Michael Feroli in a note to clients. “The Fed opened the door to dialing down the size of the next hike but did so without easing up financial conditions.”

As a result, U.S. stocks ended sharply lower on Wednesday, with the S&P 500 suffering its worst rout on a Fed decision day since January 2021, as comments from Fed Chair Jerome Powell shattered initial optimism over a Fed policy statement that raised interest rates by 75 basis points but signaled that smaller rate hikes may be on the horizon.

The FED said its battle against inflation will require borrowing costs to rise further, yet signaled it may be nearing an inflection point in what has become the swiftest tightening of U.S. monetary policy in 40 years.

“It’s as if investors came to a haunted house and got candy, but once they unwrapped it, saw it was soggy broccoli,” said Max Gokhman, chief investment officer at AlphaTrAI.

The latest edition of our finance and property news digest with a distinctively Australian flavour.

Go to the Walk The World Universe at https://walktheworld.com.au/

Is The Tech Bloodbath Really Over?

On Friday there was a robust, broad-based rally across Wall Street as markets looked over more encouraging economic data and a sunnier earnings outlook. This despite the upcoming Federal Reserve policy meeting next week. The FOMC decision is widely expecting a unanimous vote for at least one last major rate increase, though with the Fed’s preferred price measure still showing inflation is running hot, that might make it harder for them to set up a possible downshift in its rate-hike pace for the December meeting.

That said, despite data on Thursday showed a strong rebound in U.S. gross domestic product (GDP) in the third quarter, demonstrating resilience in the world’s largest economy and oil consumer and an acceleration with inflation, strong consumer spending data, and a robust labor market, much of Wall Street is growing confident that the Fed will pause tightening once they take the funds rate to 4.50-4.75% next quarter to the point where Financial markets have now priced in an 84.5% likelihood of a fifth consecutive 75 basis point interest rate hike at the conclusion of the Fed’s Nov. 1-2 policy meeting, and a 51.4% chance the central bank will decelerate to 50 basis points in December.

In addition to the FOMC decision, traders will also closely monitor the nonfarm payroll report. The strong labor market is still expected to show job growth with 200,000 jobs created in October, down from the 263,000 created in the prior month. The unemployment rate is expected to tick higher and wage gains are expected to slow.

So all major U.S. indexes ended the session up about 2.5% or more, with the S&P and the Nasdaq notching their second straight weekly gains. The blue-chip Dow posted its fourth consecutive Friday-to-Friday advance and its biggest weekly percentage gain since May. As a result, the bulls were back, even if largely driven by hopium (remembering the bulk of economists are still seeing a US recession likely next year!)

“This has been one of the best months (so far) in the history of the Dow, suggesting the bear market likely ended,” said Ryan Detrick, chief market strategist at Carson Group. “Big monthly moves historically happen at the end of bear markets.” “This is the second Friday in a row we’ve seen aggressive buying suggesting investors are growing more comfortable holding over the weekend,” Detrick added.

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Is The Tech Bloodbath Really Over?
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Is The Tech Bloodbath Really Over?

On Friday there was a robust, broad-based rally across Wall Street as markets looked over more encouraging economic data and a sunnier earnings outlook. This despite the upcoming Federal Reserve policy meeting next week. The FOMC decision is widely expecting a unanimous vote for at least one last major rate increase, though with the Fed’s preferred price measure still showing inflation is running hot, that might make it harder for them to set up a possible downshift in its rate-hike pace for the December meeting.

That said, despite data on Thursday showed a strong rebound in U.S. gross domestic product (GDP) in the third quarter, demonstrating resilience in the world’s largest economy and oil consumer and an acceleration with inflation, strong consumer spending data, and a robust labor market, much of Wall Street is growing confident that the Fed will pause tightening once they take the funds rate to 4.50-4.75% next quarter to the point where Financial markets have now priced in an 84.5% likelihood of a fifth consecutive 75 basis point interest rate hike at the conclusion of the Fed’s Nov. 1-2 policy meeting, and a 51.4% chance the central bank will decelerate to 50 basis points in December.

In addition to the FOMC decision, traders will also closely monitor the nonfarm payroll report. The strong labor market is still expected to show job growth with 200,000 jobs created in October, down from the 263,000 created in the prior month. The unemployment rate is expected to tick higher and wage gains are expected to slow.

So all major U.S. indexes ended the session up about 2.5% or more, with the S&P and the NASDAQ notching their second straight weekly gains. The blue-chip Dow posted its fourth consecutive Friday-to-Friday advance and its biggest weekly percentage gain since May. As a result, the bulls were back, even if largely driven by hopium (remembering the bulk of economists are still seeing a US recession likely next year!)

“This has been one of the best months (so far) in the history of the Dow, suggesting the bear market likely ended,” said Ryan Detrick, chief market strategist at Carson Group. “Big monthly moves historically happen at the end of bear markets.” “This is the second Friday in a row we’ve seen aggressive buying suggesting investors are growing more comfortable holding over the weekend,” Detrick added.

Go to the Walk The World Universe at https://walktheworld.com.au/

Playing The Inflation Game… [Podcast]

The news continues to confuse, as Wall Street contended with another volatile session. Investors mulled the Federal Reserve’s path of interest-rate hikes while assessing mixed economic data and a slew of earnings reports, whilst the ECB doubled official deposit rate, and Credit Suisse revealed their plans to revamp their business.

At the end of the day, the Dow closed higher on Thursday, as a rally in Caterpillar and Boeing cushioned the rout in tech after META delivered disappointing quarterly results. The Dow Jones Industrial Average gained 0.61%, the Nasdaq was down 1.6% and the S&P 500 fell 0.55%. The S&P 500 closed lower, after swinging between gains and losses for most of the session.

The big news was Meta Platforms which fell nearly 25% after reporting third-quarter results that missed on the bottom line and were an “absolute train wreck,” according to Wedbush.

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Playing The Inflation Game... [Podcast]
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Playing The Inflation Game…

The news continues to confuse, as Wall Street contended with another volatile session. Investors mulled the Federal Reserve’s path of interest-rate hikes while assessing mixed economic data and a slew of earnings reports, whilst the ECB doubled official deposit rate, and Credit Suisse revealed their plans to revamp their business.

At the end of the day, the Dow closed higher on Thursday, as a rally in Caterpillar and Boeing cushioned the rout in tech after META delivered disappointing quarterly results. The Dow Jones Industrial Average gained 0.61%, the NASDAQ was down 1.6% and the S&P 500 fell 0.55%. The S&P 500 closed lower, after swinging between gains and losses for most of the session.

The big news was Meta Platforms which fell nearly 25% after reporting third-quarter results that missed on the bottom line and were an “absolute train wreck,” according to Wedbush.

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

Lemmings Running From Ups To Downs And Back Again! [Podcast]

In this week’s market review we highlight once again the volatility in the markets. The fear gauge in the US is sitting at around 30, and still signals more uncertainty ahead. It is worth remembering that such massive swings are being harvested by the algo’s and big financial players who are able to trade on them, and which in turn help to exacerbate the moves. Such large swings are not a sign of a well-functioning market, more a sign of the how close to chaos we are. And as normal we will start with the US, look across Europe and Asia and end in Australia.

Equities have been under pressure this year as the central bank has embarked on an aggressive rate hike path as it attempts to reign in stubbornly high inflation, increasing worries of a policy error that will send the economy into a recession.

The latest edition of our finance and property news digest with a distinctively Australian flavour.

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Lemmings Running From Ups To Downs And Back Again! [Podcast]
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Lemmings Running From Ups To Downs And Back Again!

In this week’s market review we highlight once again the volatility in the markets. The fear gauge in the US is sitting at around 30, and still signals more uncertainty ahead. It is worth remembering that such massive swings are being harvested by the algo’s and big financial players who are able to trade on them, and which in turn help to exacerbate the moves. Such large swings are not a sign of a well-functioning market, more a sign of the how close to chaos we are. And as normal we will start with the US, look across Europe and Asia and end in Australia.

Equities have been under pressure this year as the central bank has embarked on an aggressive rate hike path as it attempts to reign in stubbornly high inflation, increasing worries of a policy error that will send the economy into a recession.

The latest edition of our finance and property news digest with a distinctively Australian flavour.

Go to the Walk The World Universe at https://walktheworld.com.au/