- DJI is soaring; S&P 500, decline of the Nasdaq; rally of banks, tokens, NYFANG slide
- Energy leads the S&P 500 sector winners; weakest technological group
- Euro STOXX 600 index down ~ 1.3%
- Bitcoin, gross gain; dollar ~ flat; gold falls
- The 10-year US Treasury yield is ~ 1.65%
November 23 – Welcome home for real-time market coverage presented by Reuters reporters. You can share your thoughts with us at firstname.lastname@example.org
A GREEN FUTURE: PRIVATE FINANCING AND INVOLVEMENT OF TRADE INVESTORS (1118 EST / 1618 GMT)
As the dust settles on COP26, much has been said about what it means for governments, businesses and investors, but the consensus was that trillions of dollars in funding must be mobilized to have any hope. meaningful to avoid the worst. climate change and that the private sector is essential.
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It goes without saying that the Asian Infrastructure Investment Bank (AIIB) seeks to increase the amount of private capital that it can help implement on its projects.
Ludger Schuknecht, vice president and general secretary of the AIIB, told the Reuters Global Markets Forum (GMF) that the AIIB’s securitization program was “well underwritten”, adding that about a third of the stake came from outside of Asia itself.
“If you look at the spreads, over six months, responsible for class A, the one rated AAA, in the 120-125 bps range … So a good return for investors who wanted high-rated bonds and a good one. amount.”
Schuknecht said the bank “was even trying to create an environment for retail investors to invest in the climate space as well,” which, he added, would be a first in Asia.
While climate finance was previously closely linked to debt markets and more specifically to green bonds, COP26 appears to have cemented the belief among many investors across the capital structure that money should be allocated in a more respectful of the environment.
“The focus is on the whole range of solutions – discretionary portfolios, liquid and illiquid funds, structured products, direct transactions,” Damian Payiatakis, head of sustainable and impact investing at Barclays Private Bank, told GMF.
“For many investors, the entry points tend to be in investments where they are already active and familiar. Looking back, sustainability is the next step in investing, not just the last product or product. latest trend, ”Payiatakis added.
SMALLER PIECE OF PUMPKIN PIE: MARKIT SHOWS SLOWING EXPANSION (1054 EST / 1554 GMT)
A single economic indicator released on Tuesday suggests that growth in trade activity in the United States has lost momentum.
While the expansion of the manufacturing sector (USMPMP = ECI) accelerated slightly, the growth of services (USMPSP = ECI) – which accounts for a larger share of the total pie – has unexpectedly slowed, according to the global information company HIS Markit.
Markit’s preliminary “flash” purchasing managers index (PMI) for November provided a reading of 59.1 for goods manufacturers, an increase of 0.7 points from October. But the impression of the services defied the consensus by losing 1.7 points to 57, two points lower than expected.
Overall, the composite number lost 0.9 points to 56.9.
A PMI reading above 50 indicates monthly expansion.
While the US economy has essentially reopened, with a sawtooth demand for goods over customer-centric services approaching a semblance of serenity, the supply of the equation remains in critical care as material shortages. and workers continue to restrict activity.
“The slowdown shows how hard the economy is coping with ongoing supply constraints,” writes Chris Williamson, chief economist at Markit. “Input cost inflation rose sharply in November to a new survey high, adding to the pressure for companies to pass recent cost increases on to customers in order to protect their margins.”
“Average prices charged for goods and services have continued to rise at an unprecedented rate,” adds Williamson.
Compared to its global competitors, the expansion of factory activity in the United States and Europe is essentially neck and neck, with commodity producers across the pond overtaking the United States in terms production and workforce, but US producers are benefiting from faster growth in new orders.
And since the end of the pandemic recession – the deepest and shortest economic contraction on record – China has clearly been lagging behind.
On Wednesday, investors will be treated to a traffic jam of indicators as the markets exit the city to welcome the Thanksgiving holiday.
On the agenda for tomorrow (take a deep breath), mortgage demand, corporate profits, durable goods, GDP, consumer spending, PCE inflation, jobless claims, inventories, new home sales and consumer confidence.
As for Wall Street, the absence of significant catalysts for market developments exerted its gravitational influence on major stock market indices, with the benchmark S&P 500 on track for its third consecutive day in the red.
Energy (.SPNY) is the outlier on the upside, soaring crude prices cause the sector to soar.
CAN WALL STREET STAGE A RETURN? (1015 EST / 1515 GMT)
After opening like a mixed bag, the top three Wall Street averages managed to turn positive at the start of Tuesday’s session after US HIS Markit data showed US trade activity slowed moderately in November due to labor shortages and raw material delays, contributing to the price spike in the middle of the fourth quarter. Read more
In contrast, the S&P 500 (.SPX) and the Nasdaq (.IXIC) were less confident and quickly fell back into the red.
At last glance, there were four sectors in modest decline, with technology (.SPLRCT) being the furthest away. Communications services (.SPLRCL), consumer discretionary (.SPLRCD) and healthcare (.SPXHC) are down.
The energy sector (.SPNY) is the biggest percentage gainer in the benchmark, with oil gaining ground to stabilize at nearly $ 80 a barrel after the United States announced its intention to free up to 50 million barrels of oil from their reserves to cool the market.
Markets are also digesting Monday’s news that Jerome Powell has been appointed for a second term as Fed chairman and that expectations were put forward on Monday for an interest rate hike by now. June 2022 compared to the previous expectation for July. Read more
LIRA STILL IN CRISIS, BUT NOT A GLOBAL CONTAGION YET (0917 EST / 1417 GMT)
After an 11-day consecutive losing streak for the pound, the Turkish currency is once again firmly in crisis territory. The biggest concerns for investors now are where will the massive sell-off end and what are the chances of the contagion spreading?
The Turkish lira fell nearly 15% on Tuesday, while its benchmark (.XU100) rose 1.5% on suddenly cheap valuations. Turkish banks (.XBANK) have held up well so far, up 19% this month. The broader stock index is up 17% in November after hitting record highs.
Given its limited trade and financial ties with the rest of the world, as well as the improving external positions of most emerging markets, economist Simon MacAdam of Capital Economics writes that a global fallout is unlikely. Turkish banks have $ 10 billion in foreign loans on their books, so domestic banking strains would not have a big impact on overseas lending.
“The way it would get uglier for the rest of the world would be if President Erdogan kept his cool long enough and the reading drops enough to endanger Turkish banks,” MacAdam writes.
Nevertheless, some Spanish and European banks like BBVA with Turkish exposure via its subsidiary Garanti could continue to underperform during the duration of the crisis as they did in 2018, adds the economist.
(Bansari Mayur Kamdar)
DOW INDUSTRIAL: ON THE LINES (0900 EST / 1400 GMT)
For the past six months or so, the Dow Jones Industrial Average (.DJI) has been trapped between two logarithmic scale trend lines:
On a weekly basis, the Dow closed above a 90+ resistance line in late March. With this action, the polarity of the line changed from resistance to support.
Since then, the Dow has rebounded several times, refusing to end a week below. It now resides as support around 34,000.
On the upside, the blue chip average faces a resistance line from early 2018. This line capped strength in mid-August and again earlier this month. It now resides around 36,700.
Meanwhile, over the past six months or so, the weekly momentum has weakened. The MACD hit a more than a year low in mid-October, and despite the Dow Jones pushing to new highs in early November, the momentum study only managed a lukewarm rise.
The Dow Jones is now down 2.6% from its intraday high of 36,565.73 on November 8. But with the MACD remaining low, there is still a risk that DJI will continue to oscillate downward to test the support line again. Read more
Ultimately, a weekly close outside of the range defined by these two lines may signal a potential for acceleration. Going back below the support line may suggest a failed break above a very long term trendline, with the risk of a major reversal.
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Terence Gabriel is a market analyst at Reuters. The opinions expressed are his
Our standards: Thomson Reuters Trust Principles.