Trade deal confirmation soothes investors
US President Donald Trump’s words of assurance that the US-China Trade deal “is fully intact” helped buoy markets. Major indices across Asia were positive yesterday, although some were slightly muted, and Europe followed suit, with the DAX powering up. In the US, benchmarks looked steady.
Technical factors vs retail traders
Many critics have pointed to overly optimistic individual traders for the strength of the recent market recovery. However, the answer may actually rest with technical factors, The Financial Times reports. The rise of strategies closely tied to volatility levels, as well as the growing influence of financial market derivatives may be to blame, as well as having potentially helped fan the flames of the bear market in the first place.
Shopify shopping spree
As the coronavirus pandemic has kept people indoors, the need for online shops has risen. Shopify, which enables any individual to set up an online store, has seen its share price rise 121.9% through 22 June. How has it managed this and, more importantly, will this continue as bricks and mortar stores reopen?
The diluting of tech’s market concentration
Dominant technology companies helped markets regain losses following the crash earlier this year, but the hold exerted by those at the top may be waning. According to The Wall Street Journal, certain market-breadth indicators have climbed to recent highs so far this month — for instance more than 97% of S&P 500 stocks traded above their 50-day moving average — as stocks like Clorox, Eli Lilly and Danaher set new highs and helped to dilute technology’s dominance.
Nasdaq new highs
The tech-heavy Nasdaq index has been a major beneficiary of strong performances from the FAANG and several other tech companies. However, the message going forward is far from clear and those on Wall Street aren’t entirely bullish. According to some fund managers, stocks are overvalued and a number of big tech stocks don’t come cheap.
“Vanilla stocks” could be the right flavour
The “Nasdaq 1999” feel to the current rally has helped “stocks which are evidently worth billions but have never made money or even a physical product,” Brian Bearish of Cambiar Investors told Bloomberg. He suggests that “old-school” industrial shouldn’t be left out and that eventually money will flow into these stalwarts.
China’s $941bn sovereign wealth fund looks to passive
Following the departure of the long-time manager Susan Gao, the China Investment Corporation has moved as much as 60% of its Global Large Cap Value Equity portfolio into passive strategies, Bloomberg reports. The move saw more than $10bn of the portfolio switched to strategies tracking indexes.
China Pacific Insurance raises $1.8bn
The company issued $1.8bn in global depository receipts to become London’s second-largest debut so far this year. As tensions between the US and China force a number of stocks to consider secondary listings in Hong Kong, what the Financial Times has called the “stock connect” programme linking the London and Shanghai stock exchanges has proven fruitful.