Market jitters
On Monday, 18th May 2020 the markets basked in positive news pushing stocks up. Fed chair, Jerome Powell, said he had more ammunition to help the economy recover from its coronavirus hit.
Then came more positive news from a U.S. pharmaceutical company, Moderna Inc., saying that their vaccine phase one trials had gone very well. Markets soared on the news with the Dow gaining over 900 points.
Later, U.S. stocks pulled back in the final hours of trading yesterday as a report surfaced apparently casting doubt over the Moderna Inc. vaccine study. The previous days trading witnessed a climb in stocks riding the euphoria wave created by positive news surrounding Moderna Inc. and its vaccine trials.
On Tuesday, 19th May 2020, markets generally went in to a ‘holding’ pattern – only then later in the day (last hour of trading) to lose ground again. The Dow dropping 390 points off the previous days gains.
Then, on Wednesday, 20th May 2020 – the markets generally recovered those losses again. More news about Moderna Inc. encouraged investors. Obviously markets move daily but this is all very fickle and jittery to me.
Jittery
Jittery markets – the slightest whiff of good or bad news – (it doesn’t matter which) – will move markets. It’s doesn’t even matter if it’s true or not.
I can’t say either way for sure, but the information I read about Moderna Inc. looked positive, and positive news will easily move markets up right now. However, U.S. markets and futures pulled back a day later after making substantial gains as bad news arrived.
It was reported that some scientists asked by health news site Stat ‘queried’ the data? Stocks up with good news as energetically as they ran with the good.
Then yesterday it was also reported that, Moderna Inc. said it would never release coronavirus vaccine data different from ‘reality’. Markets are desperate for good news.
And your point is?
My point is this, and it’s very simple, so I apologise to the genius investors and traders out there but markets are very fickle and jittery right now. The market will happily cling to any kind of good news and punish bad! One day markets tearing up – the next falling back. Volatility returns – or should that now be called jittery!
We see this when the Fed makes a statement, or when job data is released and it was at it’s most obvious during the U.S. and China trade war period as Trump tweeted on a daily basis. Fickle! Jittery! Volatile! Not conducive to achieve stable trading.
It’s obvious though, that good news will move markets up and that bad news will move markets down – but this is a bit too fickle for my liking. Is the rally we have just experienced real or fake? It’s gone up so far that’s for sure – but for how much longer? It really gets confusing when, ‘bad news is good, and ‘good news is bad’.
Up!
And on Wednesday 20th May 2020 – they went back up, again!
It was pretty much the Monderna Inc. vaccine report driving the markets, backed up too by the Federal Reserves ‘ammunition’ comment.
The Dow gained around 370 points to finish up at: 24576
FTSE 100 up: 65 points
Dax up: 149 points
Market moving events to watch – Thursday
Japan – import and export data due Thursday
Germany – manufacturing PMI data due Thursday
EU – PMI data due Thursday
UK – services and manufacturing PMI data due Thursday
Initial U.S. jobless claim data due for release Thursday at: 13:30 BST – market mover, one to watch!
U.S. – service and manufacturing PMI data due Thursday at: 14:30 – 15:00 BST
U.S. – Fed’s chair Powell speech Thursday due at: 19:30 BST – market mover, one to watch!
Market moving events to watch – Friday
Japan – interest rate decision and consumer price index data due
UK – retail sales data due
EU – ECB monetary policy meeting information due
Latest on 21st May 2020
AstraZeneca is reported to be gearing up to manufacture 400 million doses of Covid-19 vaccine if Oxford University trials are successful. U.S. is reported to have placed investment in AstraZeneca.
Johns Hopkins data suggests coronavirus cases surpass 5 million.
U.S. Senate passes bill that potentially could lead to China firms being de-listed from U.S. stock exchanges.
U.S.- China tensions likely to build even more over the coming weeks and months.
UK sells negative yielding bonds for the first time, 20th. May 2020
Negative rates in the UK for the first time, this is not good. The UK government can now get paid to borrow money, oh dear! This highlights just how much central banks have become a market for sovereign debt.
Getting out of a negative rates is difficult as the Eurozone and Japan can clearly demonstrate. They are not good examples of monetary policy success.
Even more debt is on the way!