Thursday 19 September 2019

FAANG recovery steadies markets

World markets were subdued ahead of the Thanksgiving holiday in America, but US stocks climbed - with tech rallying as the steep losses from Tuesday's session got a haircut. (stock picture)
World markets were subdued ahead of the Thanksgiving holiday in America, but US stocks climbed - with tech rallying as the steep losses from Tuesday's session got a haircut. (stock picture)

World markets were subdued ahead of the Thanksgiving holiday in America, but US stocks climbed - with tech rallying as the steep losses from Tuesday's session got a haircut.

All major equity benchmarks were higher, with the Nasdaq indexes pacing gainers and erasing more than half of Tuesday's decline. Consumer discretionary shares and communications services companies paced the increases in the S&P 500 Index.

Apple, which had lost 7.5pc in the first two days of the week, rose slightly.

"The FAANGs [Facebook, Apple, Amazon, Netflix and Alphabet's Google] were doing all the heavy lifting for the indexes, and now that that's come unwound somewhat," said Craig Brothers, head of fixed income at Bel Air Investment Advisors.

"Tech had an oversize effect on the rally and an oversize effect on the selloff, because it's such a big portion of the indexes."

The dollar weakened after MNI reported the Fed is considering ending a cycle of interest rate hikes as early as the spring. In addition, US data showed that durable goods orders declined and filings for unemployment benefits rose. "The market is really trading on technicals, a lot of the tech names are very overvalued," said Rahul Shah, chief executive officer of Ideal Asset Management.

"For a name like Apple, you could argue that some buyers are coming in at this level. But, overall, today's action might be an oversold bounce. I wouldn't read it as a shift in the tenor of the market."

Banks and telecommunications companies led an advance in the Stoxx Europe 600 Index as optimism for a compromise on Italy's budget buoyed stocks. The euro gained and Italian bonds firmed on reports the Italian government may be open to budget revisions as the European Union took a first step toward fining the country.

Apple's plunge on Tuesday hit suppliers in Asia, sending the leading benchmark tracking Asia-Pacific stocks lower. Oil rebounded from a one-year low to leap above $55 a barrel, even as US President Donald Trump urged Saudi Arabia to keep reducing prices.

Bloomberg

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