Monday Market Minutes: The Bear Facts

By Glenn Dyer | More Articles by Glenn Dyer

Wall Street survived a near bear experience on Friday afternoon, so more of the same this week?

In Australia it will be the usual post-election ‘what does the result all mean?’ today before attention switches back to the US and the way Wall Street is travelling as another week of weak reports from retailers upset forecasts.

China’s rate cut on Friday gave some heart to offshore markets but investors cheered and forgot the reason for the 0.15% cut in a key mortgage rate – the Chinese economy is tanking, led by a receding property sector.

Certainly there’s a cautious opening here today judging by the small 15 point fade in ASX200 futures on Friday night/Saturday morning.

Rising fears of a recession pushed US stocks briefly into a brief bear market on Friday with the S&P 500′s decline from its record high in January reaching 20% at stage in trading.

A dramatic late-day reversal pushed the benchmark slightly into the green for the day at the closing bell.

The S&P 500 finished 0.01% higher to 3,901.36 on Friday after falling as much as 2.3% earlier in the session. At the day’s lows, the S&P 500 was 20.9% below its intraday high in January. The index ended the week around 19% below its record.

This year’s slide in the main US market measure is the biggest so far since the rapid bear market in March 2020 at the start of the pandemic.

The Dow ended 8.77 points higher at 31,261.90 after being down more than 600 points at the day’s lows. The Nasdaq fell 0.3% and is already deep in bear market territory, more than 29% off its high of last November.

For the week, the Dow lost 2.9% for its first eight-week losing streak since 1923. The S&P 500 lost 3% for the week, while the Nasdaq shed 3.8% — with both posting seven-week losing streaks.

It was the longest losing streak for the tech-heavy index in 21 years – since the tech and net wreck.

China’s surprise rate cut – the second cut in a key mortgage rate last week – saw global stocks rally at the end of a turbulent week for markets everywhere.

Europe’s Stoxx 600 share index rose 1.5% on Friday and London’s FTSE 100 added 1.8% In Asia, Hong Kong’s Hang Seng index added 3%, China’s key CSI 300 added more than 1.9% and Japan’s Nikkei 225 rose 1.3%.

The moves came after China cut its benchmark mortgage lending rate by a record 0.15 (Sunday’s cut in in another mortgage rate – for first time home owners – was a tiny 0.2% and unconvincing).

The Aussie dollar ended over 70 US cents at 70.40 US cents which was more to do with an easing in the greenback.

US 10-year bond yields eased a touch to end the week at 2.79%, down 6 points on the day. More importantly Friday’s close was down from a peak of more than 2.98% on Wednesday and just under 2.92% the previous Friday.

That’s a real sign of the hard heads in global finance heading for the mattresses, courtesy of the weak retail reports last week and the attendant rise in fears about sliding consumer spending and a recession.

The S&P/ASX 200 index bounced back from Thursday’s losses to close 1.2% higher at 7,064.5, rising 1% for the week.

That was ahead of the election and the expected win by the ALP.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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