The US stock market rallied sharply after the London close last night wiping out the losses and posting a gain of 1.14% on the day. The FTSE has similarly rallied in relief this morning currently up 100 points. So, what is the volatility all about? Rising US interest rates in 2019, the shutdown of US Government departments, doubt over President Trump’s wall across the Us/Mexican border and last but not least the key indicator from China which showed industrial companies’ profits declining for the first time in 3 years. In a nutshell, the US markets are reacting to the realisation that economic growth will begin moderating in H1 2019. The more rational market watchers will already have realised that this is hardly new news as most of the factors in the list above have already been well known for some time, so this is more a case of markets having over reacted in both directions prompted by lower volumes due to the holiday period.
As Pink Floyd snarled: “We don’t need no education, we don’t need no thought control, no dark sarcasm in the classroom, teachers leave those kids alone” in their 1979 Another Brick in the Wall. Well those kids are the ones who -yes you guessed it -are the ones marching the markets up and down. A bit of thought control would help see them through these market gyrations: volatility is going to be continually present for the short term.
So, for you Pink Floyd fans out there and especially President
Trump, the last line goes:
All in all you’re just another Brick in the Wall
Have a great weekend!
Intraday Major’s Performance:
Discussion and Analysis by Humphrey Percy, Chairman and Founder
Click Here to Subscribe to the SGM-FX Newsletter
US Dollar With the US Election just over 6 months away it is time to think about the implications for USD with a new President. In case you have missed it Trump plans In the event he wins to devalue USD to boost US exports as part of his MAGA philosophy. As we know ex […]
Japanese Yen With JPY at a new 34 year low versus EUR, the market is set for an ambush by the Bank of Japan if it acts today at the end of their Policy Meeting to support the Yen. The reason that the market is susceptible is because it has convinced itself that the BoJ […]
Too soon to call USD lower Those following the US Dollar’s performance in the markets would have noted a recent downturn accelerating as this week has progressed. There have been two factors driving this sell-off but it is far from certain that either may endure long enough to push the Dollar index back to its […]