Equities vs Bonds, who to believe

30 June, 2016

Global post-Brexit relief rally continued to push Asian stocks higher on Thursday, after U.S. stocks ended yesterday’s session sharply to the upside, recovering more than half of its losses triggered by the Brexit vote, and the FTSE 100 erasing all losses made in the two-days selloff.

The two-days rally in equity markets suggest that some investors are becoming less worried on the economic impact a Brexit might cause in the foreseeable future as central banks and policy makers stand ready to intervene whenever needed. However, fixed income markets disagree and flight to safety pushed many sovereign debt yields to new historic lows. According to Fitch, the amount of negative-yielding global debt jumped to $11.7 trillion, a 12.5% higher than end of last month. The mixed signals provided by different market participants suggests one certain thing “more volatility ahead”.

Oil prices gave up some of Wednesdays gains with Brent trading below $50 per barrel as fears over Norway’s strike abated, where a pay dispute involving more than 700 workers at seven producing fields was expected to impact more than a fifth of the country’s output. Oil was the best performing asset in first half 2016, gaining more than 34% assuming it closes today around $50. No doubt the numerous production outages played a major role in the rally, but the range bound movement since mid-May provided some good vibes in financial markets after being the major source of uncertainty in 2015 and first couple of weeks in 2016.   

In currency markets, sterling bears were trying to take back control before European markets opens. GBPUSD managed to recover 400 pips from Monday’s low after dropping by more than 11% in the two-days post Brexit vote. Equity traders shouldn’t ignore sterling moves as it’s likely to play a major role in identifying risk on/off days. On the data front UK’s final Q1 GDP is due to release and expected to come in line with previous reading of 0.4% growth, but taking into consideration that this is a lagging indicator and investors are more interested in knowing whether UK will fall into recession later in 2016 or 2017, the released data will have little impact on the currency direction.  


Source link  
Yuan approaches critical level

The trading week kicked off with a panicked sell-off in Chinese equities which simply expresses growing fears in financial markets. Rising U.S...

Gold shines on Italy turmoil

Gold is poised to remain in the limelight this week after aggressively appreciating roughly $18 in a three-hour window. The yellow metal surprised markets...

Fed hike failed to satisfy dollar bulls

Despite U.S. President Donald Trump's dissatisfaction with the Fed's monetary policy tightening measures, the Fed as expected raised interest...


Trump makes mark at United Nations

Although a variety of headlines are circulating following the speech from President Trump at the United Nations, financial market movements are slightly...

Dollar path hinges on Fed dot plot

The U.S. Dollar has enjoyed a robust rally over the past seven months. An economy growing above potential rate, fiscal stimulus, low unemployment...

Risk aversion returns as tariffs take effect

Politics and trade tensions are expected to be the key market drivers this week. President Trump's tariffs on $200 billion worth of Chinese goods...


Investors await China's response

U.S. President Trump moved forward with imposing 10% tariffs on $200 billion of Chinese imports effective next week. Trump's move has obviously...

EM Currencies slide as Dollar appreciates

Emerging market currencies have been treated without mercy by a broadly stronger Dollar, yet again. The Dollar Index appreciated to its highest level this year...

Pound crumbles as UK inflation fails to rise

Repeated signs of easing inflationary pressures in the United Kingdom could plant a seed of doubt among investors about whether the Bank...


In the past 24 hours Bitcoin has gained 0.34% and reached $6509.37420442. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has gained 0.6352% and is now at $1.1587. Start trading and making money on Forex today.

In the past 7 days Ethereum has gained 3.14% and is now at $206.944819969. Have the most popular cryptocurrencies compared online 24/7.


Top Brokers offering Daily Forex Market Reviews


Forex Currencies Forecasts


Top 10 Forex Brokers 2018

# Broker Review
1easyMarketseasyMarkets91%
2FXTMFXTM88%
3HYCMHYCM87%
4Alfa-ForexAlfa-Forex86%
5FxProFxPro85%
6FIBO GroupFIBO Group84%
7OctaFXOctaFX83%
8HotForexHotForex82%
9FXCMFXCM80%
10AvaTradeAvaTrade77%
  


Share: