The euphoria from statements about the upcoming trade deals the US and China made at the conclusion of the G20 summit in Argentina, did not last two days.
On Tuesday the American stock market again fell sharply on the background of massive sales algorithmic hedge funds and alerts from the government debt market where the yield on 3-year securities for the first time in 11 years exceeded the rate for 5 years. The S&P index has fallen by 3.24%, the Dow Jones showing the capitalization of the 20 largest U.S. companies slipped by 3.1 percent and Nasdaq dropped 3.8 percent after a precipitous decline in the industry’s giants.
Amazon shares fell almost 6%, Apple 4.5%, the capitalization of Google fell nearly 5%, Netflix lost more than 5%.
Although China has announced that it will resume purchases of American LNG, oil and coal, suspended in early autumn, the market continues to doubt that the deal that Donald trump was announced as “the biggest in history” is still possible, says economist ING iris pang.
While Beijing has not received signals about the readiness to make a retaliatory duty and to prosecute for theft of intellectual property, and this would be the administration of Donald trump, says pang.
In the debt market, meanwhile, was a “historic event”, says Director of the analytical Department of “Loco-invest” Cyril Tremasov: yield curve of government bonds became inverted at the site 3-5 years.
The key is the spread between 2-year and 10-year securities, which remains positive, he notes, although the difference is rapidly shrinking: the day before she was only 14 b.p. vs 24-26 b.p. 3 months ago.
The inversion curve is the signal of a looming recession: before the crisis of 2007-09gg spread “2-10” for the first time became negative in exactly 2 years before it started.
“The most striking aspect of this dynamic is the scale of it in just two days and how it gained momentum on level ground, immediately after, was supposed to be a friendly meeting between the US and China — wrote in the review Peter Boockvar, investment Director of the Financial Group Bleakley.
A massive dumping of shares came on the American market from the hedge funds that use computer models to track large-scale market trends (CTA), says Nomura analyst Charlie Mcelligot: 2763 break of the S&P500 became the signal for sale in the amount of 32.8 billion dollars.
The next point was marked 2711, where robots threw off the securities 32.4 billion. Key level — 2574, says Mcelligott: if he can’t resist, the market was overwhelmed by a tsunami in the amount of 122 billion dollars on the sale.
Capital away from equities into debt, say analysts at Societe Generale: yield on 10-year us securities again fixed below 3% per annum, and at the end of trading on Tuesday amounted to 2.91%.
On Thursday, stock markets around the world covered the new wave of sales on the news that China has arrested a man Wanzhou — CFO of Huawei.
The man, who is also the daughter of the founder of the Chinese technology giant, was arrested in Vancouver on 1 December at the request of the U.S., where she is suspected of violating sanctions against Iran.
Now she is facing extradition to the United States, Reuters reported the informed sources.
Investors who believed in the possibility of the end of the war, received a cold shower, says Nomura analyst Bilal Haves.
Markets suffer a shock: trading in China ended with the Shanghai Composite falling 1.7%; Hong Kong equity index manufacturers of technological equipment have fallen by 3.5%, while the sub-index of shares of the technology sector — 4.4%. From Asia, the sale will spread to Europe, where 17.14 GMT composite index EuroStoxx 50 fell to 2.64%, hitting a new low.
Futures on the S&P 500 index early in the session had fallen to a limit, which forced the CME Group to halt trading, told Bloomberg the exchange.
At 17.16 contracts fall 1.66%, promising a continuation of the sell-off in U.S. stock market capitalization from the end of September fell by more than $ 3 trillion.
The arrest of a top Manager Huawei is a clear signal that a trade war is not only not subside, but reaches a new level of escalation, and the technology sector will be the main scene of the battle, said the chief economist of Deutsche Bank in China Zhiwei ran.
Huawei is perceived as one of the most successful technology companies in China and the arrest of its top Manager puts the political leadership in Beijing in a very awkward situation, she explains: the public opinion will probably become more aggressive towards US, and in these conditions the Communist party will find it difficult to inform the public that they are going to make serious concessions to Washington.
The Chinese Embassy in Canada issued a sharp statement in which he said that the arrested Chinese citizen has not violated any canadian or American laws. “China is firmly opposed to such actions, which constitute serious human rights violations… We call on the canadian and American authorities to return the freedom lady man, and intend to closely monitor the situation”, — the document says.