WHY THE LAST 2 WEEKS IS SO DIFFICULT TO TRADE? – Making Sense of Two Very Busy Weeks for Markets

For at least two weeks now, traders and investors could be forgiven for feeling like they have been trying to drink from a fire hose, and a multi-flavor one at that. Virtually every day, they have been confronted by some combination of market-moving corporate earnings and economic news, supplemented by competing policy signals and volatile technical influences. As confusing as this situation may seem, it speaks to a fundamental transition in markets that I have described before. It has two major characteristics: increasing divergence in economic and corporate performance, as well as policy; and increasing dispersion in asset valuations. Both are underpinned by macro themes that are playing out in real time. This is best seen, and best monitored going forward, through a grouping of recent developments and market influences. They fit into three broad categories that speak to country and corporate fundamentals, policies, and technical influences on markets.

China’s Yuan, Shares Fall as Trade Row Overshadows Policy Shift

The yuan and mainland equities declined Monday, snuffing out earlier gains as concern over trade friction with the U.S. overshadowed a move by China late Friday to support its currency. The onshore yuan slipped 0.17 percent to 6.8402 per dollar as of 4:02 p.m., while the Shanghai Composite Index closed down 1.3 percent at its lowest since February 2016. The ChiNext gauge of small caps and tech stocks fared even worse, tumbling 2.8 percent — its worst day in seven weeks — to its lowest in nearly four years. The Hang Seng Index, which fell every day last week, held a 0.6 percent gain. “The market is still worried about the outlook in the trade war, so people are very cautious,” said Qian Qimin, an analyst with Shenwan Hongyuan Group Co. “They are dumping smaller caps first as their valuations are higher.” Shanghai-based Qian said the next key level to watch for the Shanghai Composite is 2,691, an intraday low it hit on July 6. If the index falls below that, it would hurt confidence and the selloff could escalate, he said. The benchmark closed at 2,705 Monday, down 24 percent from its January high. Read More @ https://www.bloombergquint.com/china/2018/08/05/china-s-markets-in-the-spotlight-after-tariff-threats-yuan-levy#gs.npEPzrg

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