November 29, 2020

volatility takes over the markets



Trump’s threat announced in the summer is on track to be fulfilled and markets are reeling. The Republican candidate assured this morning that will seek to contest the result of the elections due to the “fraud of the vote count” and the reaction of the stock markets around the world were immediate. In the case of IBEX 35, there has been a fall of 2.02% at the opening, although at this time it is stabilizing (-0.75%). While Frankfurt (-1.44) Paris (-1.21%) and Milan (-1.94) were also affected, but in the middle of the session they returned to green.

In the US stock exchanges, futures markets also plummeted after Trump’s announcement, but they are returning to the upside. The futures of S&P 500 They fell to 0.7% and at this time it is 0.44 positive, although it has come close to two points of rise. Same result for the futures of Dow Jones that after the message of the current president they fell by 0.5%, but which has turned green again with 0.07. For their part, the futures of Nasdaq they are the ones that have weathered the volatility of the day the best, standing at + 2%.

Fall of the 10-year bond

The possible legal battle announced by Trump in the early morning has also been noticed by investors in the US 10-year treasury bonds. Mona Mahajan, American equity investment strategist of Allianz Global InvestorsHe said that the yield on these basic bonds, which reached 94 basis points earlier tonight, “has fallen to 83 basis points, a reversal of 10 or 11 points, something that reflects a bit of a flight to safety.” In the same way, he highlighted the rise in the dollar and the drop in gold prices below $ 1,900 “also in the context of a flight similar to security transactions.”

Along the same lines, Mahajan assures that the possible challenge has made a dent in “cyclical and value stocks”, which had performed well in recent days anticipating greater fiscal stimulus from a Democratic victory. Now it appears to have stabilized, while tech stocks are being boosted by the possibility of a better business environment and a lower tax regime, by Trump’s possible victory.

Yves bonzon, CIO of the Swiss private bank Julius Baer, also ensures that the process of an adjusted result and the possible challenge of the result “is the worst possible scenario for the markets” and points out the danger that this will pose for risky assets, although it sends a message of reassurance for investors, assert that “underlying structural trends in the economy and society will persist beyond the tenant occupying the oval office for the next four years.”

In the case of European markets, operations are expected to be “particularly volatile”, according to the analyst of eToro, Adam Vettese. The expert also warns that this uncertainty in the markets can extend for weeks until the possible challenge can be resolved in court.

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