A week of marked consolidation on the European markets, as Stoxx600NR fell by 1.82%, and sharp declines of about 2.5% for the CAC40 and the DAX30.
At the same time, the US indexes held up better with a slight decline of c.0.2% for the S & P500 and the Nasdaq Composite which seems to points for a US capital flight back to the domestic market. The markets became nervous at the end of the week because of the geopolitical factor, while Saudi Arabia holds the president of Lebanon and asks its nationals to leave this country and uses a more and more belligerent rhetoric against Iran which raises fears of a regional conflict. In addition, doubts about the validation of the tax plan of D. Trump by the congress have led to renewed volatility.
The context becomes tense, due to demanding valuations, the (too?) low volatility, global risks that do not seem sufficiently taken into account by the market and an increasingly limited growth potential in the US market. The need for consolidation is reinforced by the rise in oil, which, if it continues, may also weigh somewhat on European growth. It is therefore a beginning of correction on equity markets that has good chances to deepen in the coming weeks, while high yield bonds, down sharply this week confirm the signal given by the equity markets.
Consolidation of Tech Stocks in Europe : TNO (Lyxor), weekly data
Marked decline in High Yield : JNK (SPDR), weekly data
Gold is up slightly and emerging markets have also consolidated, but less than in Europe because of the support of oil and commodities. Corporate results failed to support European markets this week, with disappointments particularly at the banks and some industrial stocks that have given rise to sometimes very severe corrections. Commodities have generally corrected this week as well.
On the front of currencies, no big changes with a Euro / USD which remains on the 1.16 and a GBP which remains relatively stable against the two major currencies. The 10-year rates remain very low in Europe (0.42% for the bund) and stable in the US (2.36%).
Developments in the Middle East and oil remain the key elements of the coming days, as well as the vote by the US Congress of the tax plan. The month of November is likely to prove corrective for equity markets in Europe.
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A week of marked consolidation on the European markets, as Stoxx600NR fell by 1.82%, and sharp declines of about 2.5% for the CAC40 and the DAX30.
At the same time, the US indexes held up better with a slight decline of c.0.2% for the S & P500 and the Nasdaq Composite which seems to points for a US capital flight back to the domestic market. The markets became nervous at the end of the week because of the geopolitical factor, while Saudi Arabia holds the president of Lebanon and asks its nationals to leave this country and uses a more and more belligerent rhetoric against Iran which raises fears of a regional conflict. In addition, doubts about the validation of the tax plan of D. Trump by the congress have led to renewed volatility.
The context becomes tense, due to demanding valuations, the (too?) low volatility, global risks that do not seem sufficiently taken into account by the market and an increasingly limited growth potential in the US market. The need for consolidation is reinforced by the rise in oil, which, if it continues, may also weigh somewhat on European growth. It is therefore a beginning of correction on equity markets that has good chances to deepen in the coming weeks, while high yield bonds, down sharply this week confirm the signal given by the equity markets.
Consolidation of Tech Stocks in Europe : TNO (Lyxor), weekly data
Marked decline in High Yield : JNK (SPDR), weekly data
Gold is up slightly and emerging markets have also consolidated, but less than in Europe because of the support of oil and commodities. Corporate results failed to support European markets this week, with disappointments particularly at the banks and some industrial stocks that have given rise to sometimes very severe corrections. Commodities have generally corrected this week as well.
On the front of currencies, no big changes with a Euro / USD which remains on the 1.16 and a GBP which remains relatively stable against the two major currencies. The 10-year rates remain very low in Europe (0.42% for the bund) and stable in the US (2.36%).
Developments in the Middle East and oil remain the key elements of the coming days, as well as the vote by the US Congress of the tax plan. The month of November is likely to prove corrective for equity markets in Europe.