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(CercleFinance.com) – After the wave of euphoria that came ‘out of nowhere’ on Thursday, the exuberance disappeared as suddenly as it had appeared and trading was much calmer, and volatility literally extinguished.
No follow-up to Thursday’s rush, perhaps due to a lack of new information… but it seems quite likely that the +2% surge on Wall Street the day before was mainly of a ‘technical’ nature… a politically correct way of describing a pure tearing up of prices on the eve of the ‘4 witches’ (to maximize speculative gains on short options).
No trend at the opening, no more at the closing, but a consolation prize: the Dow Jones gained 0.1%, which was enough to set a new absolute closing record at 42,063 (no new intraday zenith).
The S&P500 and the Nasdaq Composite were down -0.2% and -0.35% respectively, and the Nasdaq-100, which had jumped 2.5% the day before, only lost -0.25%, supported by the rise of Intel (+3.3%) following rumors of a takeover bid by Qualcomm.
Intel is the exception in the semiconductor sector, with On-Semiconductor falling by -5.1%, ASML by -4%, Applied Materials and Microchip by -2.3%… and Qualcomm by -2.8% (its capitalization of $190 billion is twice as high as Intel’s, whereas it was the opposite three years ago).
The tension in rates did not help the ‘technos’: the US T-Bond deteriorated by +3.5 basis points to 3.745% (i.e. +10 bps in three days), while the ‘2 years’ eased by -1 bps to 3.594%, i.e. 15 bps of ‘spread’ in favour of the ’10 years’.
No statistics have come to explain the tension in rates over the past three days and the paradox could be resolved by the return of ‘risk-on’ which is being exerted to the detriment of assets protecting against ‘risk’.
“We are clearly still at the very beginning of the rate-cutting cycle, but we seem to be in a positive scenario so far, where the Fed is cutting rates without a recession materializing,” Deutsche Bank said. “Historically, this has been a very positive combination for equities.”
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