Wall Street’s Trigger occurred without a real conviction on the part of the market. Behind the movement it was a strong coverage of sold positions and extremely low liquidity, even with high negotiating volumes.
Investors ran to terminate accumulated positions during the last reduction in markets, after the customs relief was announced by President Donald Trump on Wednesday (9). At the same time, liquidity reached the best offer – how much it is possible to negotiate at the price shown on screens – in the future, the S&P 500 reached historical minimal, according to the Goldman Sachs Operations table, and accentuated movements.
S&P 500 steps 9.5%, at the highest high daily since October 2008. At 06:00 (Brazlia Time), future contracts of the index fell by 2.1%.
“The rally was exacerbated by technical factors and coverage of shorts, given the strong liquidation observed since April 2,” said JPMorgan -analyst under the guidance of Andrew Tyler. They warned that the visibility for investors is still very low, with a risk of new climbing in the United States and China trade war and additional prices in sectors such as pharmacist and semiconductors that are still on the radar.
About 30 billion shares were traded on US scholarships on Wednesday-the largest volume ever registered, according to Bloomberg information that has been returned for almost 17 years. Last week, the hedge funds had invested in American macro products, such as Index and ETFs, in the largest weekly volume in the historical series. On Wednesday, the Goldman Sachs basket with the best-selling papers shot over 12%and exceeded the progress for the S&P 500.
“Asset managers ended the day with liquid purchases of more than $ 13 billion, after driving up and repurchasing many recently sold assets -AI support recipients, semi -leaders, megacaps and specific cyclic sectors,” said Michael Nocerino, a Goldman Sachs negotiation expedition. According to him, sales flows in macro products accumulate high at 42% during the year. “We saw aggressive coverage of shorts and technology -driven shopping.”
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Despite the worst scenario – a total trade war – has been avoided now, the environment remains fleeting. The stress did not disappear from the market. Volatility retreat quickly, but liquidity remains so weak that extreme movements, as yesterday, remain possible, especially in a heading controlled by the trade. For example, the Vix curve still remains in a stress zone.
“The recovery of measures reflects a combination of speculative investors that cover sold positions; less recession and stagflation fear; and optimism that the postponds will be lower than those threatened today,” said Bill Adams, chief economist at Commerica Bank.
According to him, companies are exempted by the possibility of a less disturbing commercial policy than expected earlier this week. Adams still warns of the high regulatory uncertainty that should be weighed in investments in the coming months. “In addition, 125% prices for Chinese imports will be a major problem for many companies if they continue,” he said.
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Goldman Sach’s economists immediately removed their recession projection, but the scenario for companies is still challenging. Analysts are already starting to embed effects on the profit before the beginning of the first quarter’s balance sheets on Friday. An indicator of Citigroup that measures profit reviews-Alta’s versus Cortes plumptade in the United States and Europe, is approaching the five-year floor, but not yet signaled recession.
The nervousness took over the financial markets. In addition to the decommissioning of the shares, the dollar has lost strength and the Treasury has met distortions and fed investments such as the Federal Reserve can intervene. All in all, US assets have been sold aggressively, while global growth forecasts undergo repracification.