What does “Super Tuesday” mean for American investors?
As American investors tackle the impact of the coronavirus, another perspective is preparing them for new fluctuations in national actions: the presidential electoral calendar.
Danielle DiMartino Booth, CEO of Quill Intelligence, a research firm, said the chances of President Trump’s re-election would be “significantly lower” if the US economy were to be brought into recession by the coronavirus epidemic. This “opens the door to the presumed candidate at this point – Bernie Sanders,” she added.
This week’s “Super Tuesday”, when 14 states and one American territory hold contests for the Democratic presidential nomination, could cement Mr. Sanders as party leader this week after a streak of victories in recent smaller battles.
At least two sectors of the stock market, health care and energy, would see their profits “decimated” under a Sanders administration given the declared objectives of the candidate to effectively eliminate private health insurance and nationalize exploration and production of energy, said DiMartino Booth. The other sectors that could be vulnerable are financial services, due to the transaction taxes planned by Mr. Sanders, as well as technology.
As Michael Bloomberg’s chances appear to be shrinking, investors are also watching Joe Biden, who is showing signs of resurgence. A victory for Biden is seen by some as negative for the markets, given his preference for raising the corporate tax rate.
The future of October Vix, an indicator of the volatility of actions around the presidential election, is now 3 points higher than its counterpart in September. “This tells me that investors are very concerned about how November will unfold,” said Stephen Aniston, president of vixcontango.com. Jennifer Ablan
How far could European stocks fall with the spread of the coronavirus?
European stocks, like those in the United States and elsewhere, experienced their worst week since the financial crisis with the fallout from the spread of the coronavirus. After a 13% drop in the popular Stoxx 600 index, investors wondered how bad it could be for a region so dependent on exports to China.
Few investors are willing to quantify the potential benefits, and this uncertainty exacerbates the market malaise. Part of the problem is that modeling the spread and economic impact of the virus is so difficult.
The 2003 Sars epidemic was widely used as a model, but companies such as First State Investments note that Sars had only a limited impact on Chinese production and exports, while the country’s share in the Global GDP is now much higher. Oxford Economics draws a parallel with the Fukushima nuclear disaster in 2011, but notes that China’s share in world GDP is about three times higher than that of Japan in 2011. In both cases, the impact on the market in Europe has been mitigated.
Amid falling prices, fund managers try to limit risk, stick to what they know and get cheap stocks if they can, rather than trying to guess the bottom.
Didier Saint-Georges, member of the strategic investment committee of Carmignac, French asset manager, believes that it is difficult to estimate the overall impact on European equities. He prefers large-cap “growth” stocks, whose profits he expects will be less affected than small-cap “value” stocks.
Pieter Taselaar, fund manager at Lucerne Capital, a European hedge fund, believes that the markets are now “on the verge of maximum panic”. He used the sale to increase his positions in stocks such as the Belgian broadband provider Telenet, which he said was hit too hard. Laurence Fletcher
Where then for the price of gold?
Gold rebounded strongly this year – hitting 9% – before being dragged into intensified market sales late last week.
Having been propelled by a leak to “safe” assets due to the coronavirus epidemic, a sharp slowdown since Thursday reduced the cumulative gains of the yellow metal to approximately 5% to $ 1,589 per troy ounce.
The strength of the early rise in gold has surpassed most analysts’ forecasts for 2020. Analysts have predicted an average price of $ 1,558, according to the London Bullion Market Association.
Gold had been in favor due to lower bond yields, which reduced the downside of holding gold, which generates no income. The 10-year US Treasury yield hit a historic low of 1.147% last week.
Holdings of exchange-traded gold-backed funds reached a record level of 3,018.8 tonnes, according to the World Gold Council, valued at $ 162 billion.
But analysts noted that the turnaround last week suggests that investors were ready to sell any liquid assets to meet margin calls on other investments.
On Friday, the price of gold fell more than 3%, the largest intraday drop since 2013.
However, gold has retained most of its gains and is expected to increase this year, as the market now expects further interest rate cuts from the Federal Reserve, says analyst Suki Cooper at Standard Chartered in New York.
“Safe haven gains tend to be sustained when the market begins to price more likely that a given negative shock is likely to impact global growth and trigger a recession,” she said. declared.
Henry Sanderson
What does “Super Tuesday” mean for American investors?
As American investors tackle the impact of the coronavirus, another perspective is preparing them for new fluctuations in national actions: the presidential electoral calendar.
Danielle DiMartino Booth, CEO of Quill Intelligence, a research firm, said the chances of President Trump’s re-election would be “significantly lower” if the US economy were to be brought into recession by the coronavirus epidemic. This “opens the door to the presumed candidate at this point – Bernie Sanders,” she added.
This week’s “Super Tuesday”, when 14 states and one American territory hold contests for the Democratic presidential nomination, could cement Mr. Sanders as party leader this week after a streak of victories in recent smaller battles.
At least two sectors of the stock market, health care and energy, would see their profits “decimated” under a Sanders administration given the declared objectives of the candidate to effectively eliminate private health insurance and nationalize exploration and production of energy, said DiMartino Booth. The other sectors that could be vulnerable are financial services, due to the transaction taxes planned by Mr. Sanders, as well as technology.
As Michael Bloomberg’s chances appear to be shrinking, investors are also watching Joe Biden, who is showing signs of resurgence. A victory for Biden is seen by some as negative for the markets, given his preference for raising the corporate tax rate.
The future of October Vix, an indicator of the volatility of actions around the presidential election, is now 3 points higher than its counterpart in September. “This tells me that investors are very concerned about how November will unfold,” said Stephen Aniston, president of vixcontango.com. Jennifer Ablan
How far could European stocks fall with the spread of the coronavirus?
European stocks, like those in the United States and elsewhere, experienced their worst week since the financial crisis with the fallout from the spread of the coronavirus. After a 13% drop in the popular Stoxx 600 index, investors wondered how bad it could be for a region so dependent on exports to China.
Few investors are willing to quantify the potential benefits, and this uncertainty exacerbates the market malaise. Part of the problem is that modeling the spread and economic impact of the virus is so difficult.
The 2003 Sars epidemic was widely used as a model, but companies such as First State Investments note that Sars had only a limited impact on Chinese production and exports, while the country’s share in the Global GDP is now much higher. Oxford Economics draws a parallel with the Fukushima nuclear disaster in 2011, but notes that China’s share in world GDP is about three times higher than that of Japan in 2011. In both cases, the impact on the market in Europe has been mitigated.
Amid falling prices, fund managers try to limit risk, stick to what they know and get cheap stocks if they can, rather than trying to guess the bottom.
Didier Saint-Georges, member of the strategic investment committee of Carmignac, French asset manager, believes that it is difficult to estimate the overall impact on European equities. He prefers large-cap “growth” stocks, whose profits he expects will be less affected than small-cap “value” stocks.
Pieter Taselaar, fund manager at Lucerne Capital, a European hedge fund, believes that the markets are now “on the verge of maximum panic”. He used the sale to increase his positions in stocks such as the Belgian broadband provider Telenet, which he said was hit too hard. Laurence Fletcher
Where then for the price of gold?
Gold rebounded strongly this year – hitting 9% – before being dragged into intensified market sales late last week.
Having been propelled by a leak to “safe” assets due to the coronavirus epidemic, a sharp slowdown since Thursday reduced the cumulative gains of the yellow metal to approximately 5% to $ 1,589 per troy ounce.
The strength of the early rise in gold has surpassed most analysts’ forecasts for 2020. Analysts have predicted an average price of $ 1,558, according to the London Bullion Market Association.
Gold had been in favor due to lower bond yields, which reduced the downside of holding gold, which generates no income. The 10-year US Treasury yield hit a historic low of 1.147% last week.
Holdings of exchange-traded gold-backed funds reached a record level of 3,018.8 tonnes, according to the World Gold Council, valued at $ 162 billion.
But analysts noted that the turnaround last week suggests that investors were ready to sell any liquid assets to meet margin calls on other investments.
On Friday, the price of gold fell more than 3%, the largest intraday drop since 2013.
However, gold has retained most of its gains and is expected to increase this year, as the market now expects further interest rate cuts from the Federal Reserve, says analyst Suki Cooper at Standard Chartered in New York.
“Safe haven gains tend to be sustained when the market begins to price more likely that a given negative shock is likely to impact global growth and trigger a recession,” she said. declared.
Henry Sanderson