The roller coaster continues across the markets, particularly regarding technology. Weaker US economic data has been a catalyst for the sell-off this week. As mentioned recently, we expect a topsy-turvy ride as traders and markets respond to multiple data points. We are seeing a lot of hedge funds buying, selling and leveraging into this market, making hay whilst longer-term investors suffer in the short-term. However, remember, this only causes pain if one sells on the dips.
The general outlook for the broader market looks quite positive, especially now we are seeing more assets ‘rising with the tide’. In other words, the markets aren’t just reliant on technology stocks performing, like it was a few months back.
There is further positive news in that the oil price has slumped. Good news for household bills and inflation alike.
It’s tight in the polls in the US, but Kamala Harris has improved her chances with rhetoric around a proposed reduction in the capital gains tax for the wealthy, compared with Biden’s higher tax stance.
Capital Gains Tax is a concerning issue for some here in the UK ahead of the budget. Some business owners are hoping to sell their company ahead of the budget, and some with second homes have been trying to offload and sell. The problem in both scenarios, due to the high-interest rate environment, activity is limited.
We had news this week that the Great British ISA is dead and buried. Hopefully the new Labour government see fit to encourage investment into UK companies.
Finally, the expectations for European interest rate reductions appear to mirror the expectations from other developed nations.
On our agenda this week:
- Markets wobble again
- What happened with US manufacturing data?
- Blue Sky comment on volatility
- The oil price falls below $75 a barrel
- Kamala Harris improves her chances
- Economists predict six consecutive ECB interest rate cuts
- Goodbye to the Great British ISA
- The move out of UK stocks continues
- Investors get their appetite back
- Summary
Markets wobble again
Technology stocks led a broad US stock market sell-off on Tuesday of this week, spooked by weak US manufacturing data.
As stated on ft.com, the S&P 500 dropped 2.1% on the first trading session since the Labor Day holiday, marking its worst day since a bout of global volatility in early August. Technology stocks, which have been a drag on the index in recent weeks, were once again the worst-performing sector. The tech-dominated Nasdaq Composite fell 3.3% while the Philadelphia Semiconductor Index was down 7.8%. Chipmaker Nvidia closed 9.5% lower, shedding more than $250 billion in market capitalisation. The stock fell a further 2.4% in after-hours trading following a Bloomberg report that the US Department of Justice (DoJ) had sent the company a subpoena, deepening its antitrust probe.
Continues…
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