An “asset return tree” (really), from Credit Suisse:
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Last week, Kit Juckes at SocGen was one of many analysts who, after looking at the latest FOMC minutes, found fit to arrive at one overriding conclusion: the era of Risk-on, Risk-off (RoRo) investing is arguably coming to an end.
As he explained… Read more
Renewed worries about the eurozone debt crisis and, to a lesser extent, another pulse of fretting about global growth, were encouraging traders to pare back racier bets following October’s strong rally, the FT reports. The FTSE All-World equity index was down 1.7 per cent, commodity prices were slipping, while “risk off” was flavouring currencies as the dollar index added 0.8 per cent. S&P 500 futures pointed to Wall Street losing another 1.5 per cent after Monday’s 2.5 per cent slump. The FTSE Eurofirst 300 tracked a poor session out of Asia by delivering a fall of 2.7 per cent as the banking sub-index sheds 5 per cent on revived sovereign debt exposure fears. The sour mood derives from the return of the market’s recent bêtes noires. Carrying greater heft was the eurozone. Risk assets had added to gains last week as investors greeted with relief news that the European Union had agreed a deal in Brussels designed to contain the bloc’s fiscal difficulties, shoring up the banking system and arranging the terms for a second Greek bail-out. Many investors now think that deal has been thrown into question after Greece’s prime minister George Papandreou pledged on Monday to hold a referendum on the package presented to Athens. A “no” vote could throw the process back into the air and possibly lead to a messy Greek default, argue the pessimists. The least it does is deliver many weeks of uncertainty.
by John McDermott and Cardiff Garcia
A risk-off day if ever there was one. Read more
Hopes that US interest rates will remain at ultra-low levels for the foreseeable future were lending some support to selective riskier assets – though trading was mixed and cautious ahead of two trend-defining flotations. The FTSE All-World equity index was flat, as currencies displayed “risk off” characteristics, with the dollar index up 0.2 per cent to 75.56. The stronger buck in turn was curtailing early demand for commodities following the previous session’s strong rally, with oil down 0.5 per cent to $100.15 a barrel, copper down 0.7 per cent to $4.07 a pound and gold off 0.4 per cent at $1,490 an ounce. S&P 500 futures were fractionally lower, but the FTSE Eurofirst 300 was up 0.4 per cent after Wall Street closed overnight near session highs after cracking a three-day losing streak. Earlier, in Asian trading, the mood was broadly positive as commodity shares gained ground on growing confidence in a global economic recovery after the Fed signalled US interest rates would remain low.