- Anyone long the UK markets will welcome this weekend after a tumultuous first full week of August and the worst one thus far in 2019. At the Wed lows the FTSE 100 was down 7.5% in a week, FTSE 250 -6%, AIM All-Share -7%. In the FTSE 350, O&G and Mining had lost over 10% each in the preceding 5 trading days: as two of the top three sectors, they account for over 20% of the NMX by capital and have a profound effect on market sentiment. Oil had fallen off a cliff dropping 15% in 5 days from $65.5 to $55.9 reversing almost all of the 2019 gains.
- By contrast gold rallied 7.5% in the same period adding over $100. Gold is up almost 20% since June ’19. Finally, bitcoin, the much-maligned risk asset has broken out from lows of $3000 in April to highs of almost $14000 in July. Previously BTC had correlated with risk-on, bizarrely it now seems to be behaving as a proxy safe haven: an odd notion by any standards.
- These are big moves especially when overlaid on an increasingly worrying macro with global economic slowdown, negative yields, negative mortgage interest rates, a trade war and a Chinese Yuan at lows against USD not seen since 2008. Sprinkle this with whatever Brexit may throw into the mix and there is a significant wall of worry to scale. It seems likely that August and September will prove even more volatile than normal this year. This does all make for good trading weather.
- A lower than expected GDP for Q2 ’19 raised the spectre of recession and dampened the nascent rally in UK indices this am; significantly denting sterling which dropped over 0.5%.
FTSE 100 -0.44% FTSE 250 -0.12, AIM All-Share -0.04: TechMARK -0.3 GBP/USD -0.5%
- China’s PBOC set a new low for the Yuan target vs USD adding to trade/currency worries.
- Gold pulled back today from a high of 1507 to a low of 1494: Brent oil did rally off yesterday’s doji rising over 2.7% to touch the $59 level
- Market sentiment saw the US VIX rise 20% above 20 while the Fear & Greed Index remains around 28 : the AAII weekly survey shows investors over 48% bearish, a marked shift from the normal 30.5% and a move of over 24% since last week.
- Of the 1404 stocks monitored by runprofits, only 164 rose in the past week while 463 fell and 777 remain unchanged