Equity Brief: Volatility creeps back as markets act normal

Markets can rebound, but they can’t escape volatility


Stock market snapshot as of [27/6/2019 4:51 PM]

  • Markets can rebound, but they can’t escape volatility. European indices endured another jumpy half session before settling down to moderate gains towards the close
  • Still, the incongruous dislocation of the recent ‘everything rally’—gold on the backfoot, Treasury yields retreating and the dollar rising—shows that the market’s state is still far from ‘normal’
  • Europe’s STOXX 600 barely closed in the black, only nominally breaking a four-session losing streak. The U.S. S&P 500 inches no more than 0.5% higher, though also eyes a positive session
  • CBOE’s VIX index of implied volatility has steadily inched higher too, holding well above its recent reversal floor around 13
  • Investors are trying to square the White House’s ‘good-cop’/’bad-cop’ commentary ahead of Friday-Saturday talks between Presidents Trump and Xi
  • Trump’s “Plan B” is to “take in billions and billions of dollars a month” more from China while doing “less and less business” with the second-largest economy. His Treasury Secretary Steven Mnuchin remained “hopeful” on Wednesday. Other Washington hawks bat away Beijing’s insistence on a ‘balanced’ deal. Little wonder that ample dissonance accompanies the wide expectation that a tariff ceasefire will be agreed this weekend

Corporate News

  • Markets are without their recent crude oil prop as energy prices consolidate recent Iran-headline and supply-news gains. Large-cap integrated oil shares are lower
  • Wall Street sees a mini rotation into financials in sympathy with similar moves overseas. The lighter mood enables Citigroup, Wells Fargo, JPMorgan and Bank of America to lead U.S. lenders higher as attention turns to their earnings and possible dividend rises next month
  • Semiconductors continue to outshine the rest of the technology sector on the back of surprisingly robust Micron earnings a day ago. The chip equipment segment is more in focus on Thursday with Applied Materials up 2%
  • Apple contributes the most index weight to blue chips. It was up 0.7% a short while ago. Walgreens Boots Alliance was top heavyweight riser, with a 4.5% advance after stronger than forecast pharmacy sales

Upcoming corporate highlights


BMO: before market open          AMC: after market close

Upcoming economic highlights


Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.