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We look at how some key markets have fared since December 31, 2015 and how they fared overnight

We look at how some key markets have fared since December 31, 2015 and how they fared overnight

Since the start of 2016, most markets have been in turmoil.

Yesterday we reported that the 'bears are in charge'.

Some see this as the start of GFC2.

Sentiment, even when disconnected from the recent 'data' is a powerful driver of markets. It is supposed to reflect group thinking about what will happen in the near, plannable future.

But, like many individuals, markets often get things wrong, or way ahead of themselves. Corrections happen.

But there is no way to know which is which until after the fact.

This update is a way to show what has happened so far in many markets this year, and what happened overnight.

Market Index 31-Dec-15 12-Feb-16 % change   % change
overnight
             
Auckland, New Zealand NZX50 6,324 5,934 -6.2%   -0.9%
Sydney, Australia AllOrds 5,345 4,817 -9.9%   -1.1%
Singapore FSSTI 2,883 2,540 -11.9%   +1.7%
Hong Kong HangSeng 21,914 18,320 -16.4%   -1.2%
Shanghai, China SSE Comp 3,539 2,763 -21.9%   -0.6%*
Tokyo, Japan N225 19,034 14,953 -21.4%   -4.8%
Frankfurt, Germany DAX 10,743 8,968 -16.5%   +2.5%
London, England FTSE100 6,242 4,970 -20.4%   +3.1%
New York, USA S&P500 2,044 1,865 -8.8%   +2.0%
             
Gold US$/oz 1,074 1,238 +15.3%   -0.8%
Oil WTI-US$/bbl 37.04 29.03 -21.6%   +10.8%
U91 discounted pump price NZ$/l $1.765 $1.575 -10.8%   n.a.
WMP NZ$/tonne 3,182 3,251 +2.2%   n.a.
             
UST 10yr yield   2.27% 1.73% -23.8%   +6.1%
NZ 2yr swap   2.86% 2.54% -11.5%   -0.3%
Aust. IG CDS iTraxx 126.53 166.65 +31.7%   +4.6%
             
* Closed for Chinese holidays - This is for Feb 5        

New Zealand swap rates for terms 4 to 10 years reached record lows at the end of trading on Friday. Record lows are approaching for the shorter terms as well.

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8 Comments

Be great to see an article here analyzing bank interest rate margins. Now that swaps have slumped to record low levels banks should be able to offer a 1,2 or 3 year fixed mortgage rate of 3.75%. Would be great to see the extent of their margin greed compared with the last 10 years historical margin data.
Also like to see the relationship between oil price and petrol price at the pump over the years reported on as it looks like petrol far too high unless the bulk of the price is govt charges.

Added to table above. (Remember, you can't really compare the price falls between the cride oil price and the discounted pump price because much of what you pay for petrol is a fixed $/l in excise taxes.)

I am not normally a great bank fan, but at the moment I can go some way to supporting high margins because:

1 Given the risks to the banks from the state of farming and the probability that house prices will fall, significantly higher margins may go some way towards preventing them going under.

2 Higher interest rates will cool the housing market

But, like many individuals, markets often get things wrong, or way ahead of themselves.

Hmmmm - only in retrospect - on the day the market maker's price is it.

'We look at how some key markets have fared since December 31, 2015 and how they fared overnight'

A far more informative perspective is obtained if markets are compared over a full year.

Most share markets peaked March to August and it has been a bumpy downhill ride since.

e.g. https://in.finance.yahoo.com/q/bc?s=%5EFTSE

or https://in.finance.yahoo.com/q/bc?s=%5EDJI

The trend is obvious.

Why one year? Why not 5 years? (especially if you invest through something like KiwiSaver).

https://in.finance.yahoo.com/q/bc?s=%5EDJI&t=5y&l=on&z=l&q=l&c=

If you start with a conclusion, you can find trends that fit your thesis anywhere.

Yes, indeed, you can look at the 5 year graph and see that a bubble formed and topped in the middle of 2015.

What is not revealed in graphs is that numerous US companies used share buy-backs to increase their earnings-to-share ratios and create an impression of strength that was only ever a façade.

One of the key indicators is supposedly Caterpillar (heavy machinery), which has recorded a dismal performance for several years.

http://www.zerohedge.com/news/2016-01-28/caterpillar-q4-sales-miss-tumbl...

If we look at Japan

https://in.finance.yahoo.com/q/bc?s=%5EN225&t=my&l=on&z=l&q=l&c=

we see that it peaked around 40,000 around 1990, fell to 20,000, then 10,000, then 8,000. Got pushed up to 20,000 again by the BoJ, but is now on the path to reality, I believe.

David, how did you get the FTSE is down -20.4% year to date?
http://money.cnn.com/data/world_markets/ftse100/

Days to the General Election: 25
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