Daily Digest: Thursday 26th September
USA
Quarterly GDP figures were the key domestic data point for US traders to watch on Thursday, as final Q2 GDP figures came in at 3%, in line with analyst expectations. Quarterly figures are an indicator of the wider economic health of an nation, measuring the total output of all active business sectors. Final US Q2 data aligned with both advance and preliminary economist predictions, indicating that economic activity has remained strong but stable. This convergence between analyst estimates and realised figures is widely interpreted as a confidence boost for investors, as economic activity rests within the expected range of the nation’s top economists. The 3% growth rate also suggests that GDP expansion is not a key concern to policymakers. If economic growth was considered too ‘hot’, the Fed may have been required to readjust their monetary policy outlook following last week’s interest rate pivot, to manage inflationary pressures.
US equity sentiment was far clearer through Thursday, as the three major indexes we follow closed higher. The S&P 500 ($SPX) rose 23.11 points (0.40%) to 5,745.37, after breaking new all-time highs of 5,767 earlier in the session. The Nasdaq 100 ($NDX) traded 142.93 points (0.72%) higher at 20,115.54 , with the index trading around 580 points shy of it’s respective all-time highs. Finally, the Dow ($INDU) managed to erase the majority of Wednesday’s declines, rising 260.36 points (0.62%) to 42,175.11.
Europe
As mentioned yesterday, the SNB’s September monetary policy decision was the headline macro event concerning European equities on Thursday. Officials voted to continue the rate-cutting cycle, reducing the bank rate by a further 25 basis points to 1%. Forward guidance was also positively received by markets, as officials signalled a willingness to continue interest rate cuts through the end of 2024.
In term’s of equity performances, the UK’s FTSE 100 (FTSE) continued higher, albeit session gains were marginal, as prices rose 16.21 points (0.20%) to 8,284.91, after being rejected at the 8,300 level.
Rest of the World
Despite facing criticism regarding the depth of Tuesday’s stimulus and its handling of fundamental economic issues, the Chinese government has announced an additional economic support package on Thursday. The nation will now look to issue additional sovereign debt packages this year, in order to boost consumer sentiment and cover the spending deficits regional governments face tackling localised economic issues. News of additional measures to support economic growth in China was well received by markets, as the Shanghai Composite Index (¥SSE) rose for a fourth consecutive session, gaining 104.65 points or 3.61% in its second largest single session move this week. The index will trade into Friday at 3,000.95, having broken the key psychological price barrier at 3,000 into Thursday’s close.
Japanese equities reacted positively to further Chinese stimulus as the nation’s benchmark index, the Nikkei 225 (¥N225), erased Wednesday’s losses, rising 1,055.37 points (2.79%) to 38,925.63. The attention of Japanese traders should now turn to Friday’s Tokyo area CPI data print, which acts as a leading indicator for wider national CPI.
AmplifyMe x Glencore Biofuel Simulation
On Thursday afternoon, I had the opportunity to take part in a session run by AmplifyMe in collaboration with global commodities trading house Glencore. The session was centred around Amplify’s new biofuel simulations and included a Q&A with two current Glencore team-members.
In terms of the trading segment, the simulation required the trading of derivatives contracts for four fuel types: Brent crude, Gas oil, Rapeseed oil, and Soybean oil, offering a unique insights into the evolving energy trading landscape. The session had two prevailing aims for participants, the first was to understand and utilise spread trading, the second was to improve our awareness and reactiveness to key news points that drive markets within the sim. When trading futures, a spread refers to a situation where the trader will simultaneously buy and sell two contracts based on either the futures expiry date, or a correlation between asset activity. Utilising a spread allows the trader to limit their exposure to a market, a metric measured by the simulation and assessed in the final performance review. The second aim was fairly self explanatory, with the updated simulation measuring both the speed of a traders reaction to news, but also whether their interpretation of direction was correct.
The simulation ran for around 30 minutes, concluding slightly earlier than expected due to some minor technical issues caused by service demand. Despite this, I performed relatively well, finishing fourth out of the 167 participants in my half of the session. I achieved a total ROI of 6.6%, and scored a news response score of 96.41%, indicating that I made quick and accurate decisions in response to market changing news events. The two charts below show my news response and net exposure management throughout the simulation. There is certainly some personal room for improvement in terms of exposure management, but overall, the session has provided a great foundation to build from.
Once again, I’d like to thank the AmplifyME team for offering another great markets simulation. I’d also like to thank co-founder & CEO Will de Lucy and Chief Content & Culture Officer Anthony Cheung for delivering the session. I look forward to giving the sim another run in October.
What to Watch Tomorrow
Tokyo Core CPI (YoY)
US Core PCE (MoM)
Sources:
https://uk.finance.yahoo.com/world-indices/
https://uk.finance.yahoo.com/commodities
https://www.londonstockexchange.com/indices/ftse-100
https://www.binance.com/en-GB/price/bitcoin
https://www.binance.com/en-GB/price/ethereum
https://qontigo.com/index/sxxp/
Stock Market Activity Today & Latest Stock Market Trends | Nasdaq
https://coinmarketcap.com/charts/#market-cap
https://www.forexfactory.com
Definitions:
YoY - Year on Year, or, Year over Year
MoM - Month on Month, or, Month over Month
QoQ - Quarter on Quarter, or, Quarter over Quarter
ECB - European Central Bank
BOJ - Bank of Japan
Fed - Federal Reserve
BOE - Bank of England
SNB - Swiss National Bank
DOJ - Department of Justice