Monday Market Minutes: Falling Knives – ShareCafe
No guide to US markets today and tonight due to the long Independence Day weekend, which means no leads for worried investors heading into Tuesday’s trading .
That won’t worry Australian investors after a surge in futures trading on Friday night – as eurozone stocks rose 0.1% on Friday and the US S&P 500 rose (helped by lower bond yields despite lingering recession fears), ASX 200 futures jumped 96 points, or 1.5%, indicating a very positive start on the ASX today.
This will be very different from Friday’s performance here when the ASX 200 fell 0.4% to 6,539.9.
In the United States, the S&P 500 rebounded 1.1% on Friday but fell 2.2% for the week, ending at 3,825. The Nasdaq added 0.9% on Friday, but fell 4.1% for the week and the Dow Jones rose 1.05% on Friday to be down 1.3% for the week.
Yields on 10-year U.S. Treasuries fell to 2.89% after hitting lows of 2.80% in late trading on Friday. The close was the lowest in almost six months. US bond yields had hit 3.48% for the 10-year and the sharp drop since then tells us how worried investors are about a likely recession.
The drop in yields came as the value of the US dollar ended with a 0.4% gain on Friday and just under 1% for the week.
The Australian dollar ended at 68.15 US cents, down 1.8% for the week.
The usual declines in early month data around the world will impact trading this week, as will the lack of an advance tonight due to the US holiday weekend.
Fears of a recession or a sharp slowdown continue to grow in all markets.
Investors will assess the bleak outlook from Bank of America Corp. chief investment strategist Michael Hartnett, who said in a note on Friday that he saw a “recessionary shock” begin for markets after the worst first half of the S&P 500 in over 50 years,
Harnett wrote in a note on Friday that while expectations for aggressive rate hikes from the Federal Reserve are peaking, inflation expectations are not, and BofA’s bullish and bearish indicator remains at “high”. bearish” for a third consecutive week.
Meanwhile, Goldman Sachs strategists said Friday that the risk of a further sell-off in equity markets was still high, as investors anticipate only a mild recession.
They said the upcoming earnings season will also be crucial for investors to gauge the impact of high inflation and weaker consumer sentiment on corporate earnings.
For the week, Eurozone stocks and Japanese stocks both fell 2.1%. Chinese stocks rose 1.6% after previously experiencing a 35% bear market.
Australian shares fell 0.6% as gains in utilities, energy and industrials were offset by falling shares in property, IT and telecommunications.
Meanwhile, the carnage in cryptomarkets continues.
Shares of crypto brokerage Voyager Digital fell 40% after announcing on Friday that it had temporarily suspended trading, deposits, withdrawals and loyalty rewards.
Its shares fell as much as 25 cents US before rebounding to around 33 cents US at market close.
The company last week issued a notice of default to Three Arrows Capital, formerly one of the most active crypto hedge funds, after it defaulted on a Voyager loan of approximately $666.7 million, including $15,250 bitcoins, or about $297 million. based on recent bitcoin price and $350 million.
Voyager said it engaged Moelis & Company as a financial adviser and had discussions with Three Arrows advisers regarding possible legal remedies.
While that was happening, Three Arrows Capital filed for Chapter 15 bankruptcy in the Southern District of New York on Friday night after weeks of speculation that it was functionally insolvent.
Bloomberg reported that Chapter 15 filings typically relate to foreign proceedings.
A week ago, a court in the British Virgin Islands ordered the local subsidiary of Three Arrows to go into liquidation.
Three Arrows had borrowed large amounts of funds from several crypto lenders, including BlockFi, Celsius, Babel Finance, and Voyager Digital, but were unable to pay.
On Thursday, the Monetary Authority of Singapore – the country’s main financial regulator – had accused Three Arrows of exceeding its asset threshold and providing false information.
Bitcoin fell over the weekend, trading at just over US$19,210 on Sunday Sydney time.