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
A weaker Dollar: Trump vs. Powell The Dollar continued to lose ground yesterday as the truce between Israel and Iran appeared to continue to hold. There has been a noticeable return to focus upon macro and monetary influences in major currency pairs. Yesterday, Fed Chair Jay Powell provided his semi-annual monetary policy report before the […]
Whiplash A highly volatile start to yesterday’s trading session saw a flight to safety in markets. Despite the Dollar having lost much of its appeal as a safe haven lately, there was still an identifiable USD bid prior to and during the European open. We have identified recently how markets have clearly differentiated between general […]
Top Trumps Geopolitical risks are outweighing macroeconomic fundamentals in today’s markets. We can see this very clearly from the muted reactions in price being generated from major macro events including data and interest rate decisions. The same holds true of the Fed’s interest rate decision where markets barely blinked at a Fed that had changed […]