equities

Nikkei poses further problems for BoJ

March 15, 2011 8:49 am by Emma Saunders

The Bank of Japan offered to pump ¥8,000bn ($98bn) into the banking system on Tuesday, following a record ¥15,000bn ($182bn) auction on Monday. The offer in same-day market operations drew bids of ¥5,400bn ($66bn).

But the Bank can do little directly to slow the rapidly falling stock market, which is reducing companies’ market capitalisation so significantly and so rapidly it imperils some companies’ survival and could lead to a credit crunch. Finance Minister
Yoshihiko Noda tried to counter this yesterday by saying the factors behind the fall were “temporary”.

The Bank is prohibited from buying shares directly. There are rumours that it might intervene in currency markets, however, to weaken the yen. (A strengthening yen necessarily reduces the number of yen per stock.) Yesterday there was at one point a spike in the dollar – apparently the result of a one-off trade. Mr Noda declined to comment. Read more

Tags: Asia, equities
Posted in Bank of Japan | Permalink

Does the Fed follow the stock market?

February 22, 2011 9:20 pm by Robin Harding

Yes it does, according to a new working paper from a group of Chinese and Swiss academics, published as a preprint.

Using both monthly and weekly data, we found very similar lead-lag dependence between the S&P500 stock market index and the yields of bonds inside two groups: bond yields of short-term maturities (Federal funds rate (FFR), 3M, 6M, 1Y, 2Y, and 3Y) and bond yields of long-term maturities (5Y, 7Y, 10Y, and 20Y)….First, the stock market and yields move in the same direction. Second, the stock market leads the yields, including and especially the FFR.

Tags: equities, stock market
Posted in Federal Reserve | Permalink

Markets and MPCs

June 8, 2010 6:17 pm by Emma Saunders

US traders get more excited about the Fed’s decisions than their European counterparts do about those of the ECB, and no-one knows why.

This from a research paper by Magnus Andersson at the ECB. The research finds, perhaps unsurprisingly, “intraday US and euro-area stock and bond market volatility strongly increases at the time of the release of monetary policy decisions”. But more so in the US than in Europe. Why?

Tentative explanations from the author include the difference in information released, the differing mandates of the two central banks, and timing uncertainty in the Fed’s releases. However, overall, “the observed discrepancy between asset-price reactions in the United States and in the euro area following monetary policy decisions still remains a puzzle.”

What else does this gem of a paper contain? Three conclusions: Read more

Tags: bonds, equities, Global, Markets, monetary policy
Posted in European Central Bank, Federal Reserve | Permalink

Hung parliament one of many sell signals

May 7, 2010 12:58 pm by Emma Saunders

Gilts down, sterling down and UK equities down. These things have followed news of a hung parliament in the UK, but there is plenty more bearish news out there to spook the markets. For example: (1) Yesterday’s record 1000-point intraday drop in the Dow, due to a clerical error or some massive sales, depending whom you believe; (2) Fears of further sovereign debt crises in Europe, where equities have been falling for days; and (3) Japan’s decision to inject $21.6bn overnight liquidity — using a crisis-era tool last used (to this extent) in late 2008. Read more

Tags: bonds, currency, equities, UK, UK Election 2010
Posted in Uncategorized | Permalink

Stock market shenanigans

February 5, 2010 11:56 am by Emma Saunders

Much talk today of ‘risk contagion‘ as share prices continue to fall sharply across the world. Equities have been falling since the start of the year, but declines over the past two days have been sharp, between 3 and 5 per cent. Analysts are blaming growing fears over sovereign debt in Greece and Portugal – as measured by still-widening credit default swap spreads – and falling confidence in sovereign debt generally.

US markets were not helped by an unexpected rise in first-time unemployment claims yesterday, and today’s US non-farm payroll data is nervously awaited. Read more

Tags: equities, equities, Global
Permalink

Taiwan to limit Chinese investment; $500m mooted

January 14, 2010 12:36 pm by Emma Saunders

Taiwan plans to set a limit on the total value of securities Chinese investors can buy under new rules due to come into force on Saturday.

Wu Tang-chieh, deputy chairman of the Financial Supervisory Commission, told this to Bloomberg but did not provide a figure and would not comment on a report in the Commercial Times that the central bank is proposing a ceiling of $500 million shares in Taiwan-listed companies. The ceiling in the current memorandum is $1bn. Read more

Tags: Asia, equities, hong kong, taiwan
Permalink

China kills Hong Kong share buy plan

January 14, 2010 10:18 am by Emma Saunders

Part of the Chinese central bank has scrapped a controversial proposal to allow Chinese citizens to buy shares listed in Hong Kong. The State Administration of Foreign Exchange, a body under the central bank, said the potentially groundbreaking proposal was one of 19 documents that were invalid as they had expired. The Taiwanese will be paying close attention: they want to limit stock purchases by Chinese citizens under new rules due to come into force on Saturday. Read more

Tags: Asia, equities
Posted in People's Bank of China | Permalink

Economic news digest

November 20, 2009 1:23 pm by Emma Saunders

Short-term interest rates in the US have turned negative. This might mean imminent disaster or it might be traders chasing safe investments as they look to secure end-of-year profits – choose between numerous explanations.

There are also competing explanations for the rise in US mortgage delinquency rates. Most of the rise is in people who are extremely late on their payments, rather than just a little: Read more

Tags: bonds, equities, foreclosures, GDP, Global, government spending, interest rates, Japan, mortgage, negative rates, rates, regulation, tobin tax, too big to fail, unemployment
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Economic news digest

November 12, 2009 1:06 pm by Emma Saunders

This might seem like a currency special edition. The dollar fell after China hinted at renminbi appreciation. The People’s Bank of China said foreign exchange policy would take into account “capital flows and major currency movements”, a pointed reference to US dollar weakness and the large speculative inflows of capital that China is receiving. Those speculative inflows are a growing concern for many emerging markets, whose currencies are rising quickly: Taiwan, Russia, Brazil, Thailand and Chile are all planning how best to slow the influx of capital.

Dollar reserves have been going out of fashion over the past few months, and now two IMF economists have called for diversification away from the greenback. This will make Geithner’s (widely mocked) ‘commitment’ to a strong dollar even harder to achieve. Read more

Tags: asset bubbles, bonds, capital controls, currency, dollar, equities, Global, gold, reserves, SWFs, unemployment
Posted in Uncategorized | Permalink

Economic news digest

November 3, 2009 1:12 pm by Emma Saunders

More than half of all children in the US will use food stamps at some point, predicts new research. Equities fall sharply in the UK and Europe, in spite of strong manufacturing data, amid fresh concerns about mortgage-backed securities and the possibility of a second round of stimulus in the US Read more