Australian Shares

Asian stock markets are in retreat mode as USD swings into further strength going into tonight’s trading session.

Wall Street at first put in some solid gains overnight but they evaporated towards the close as risk sentiment dampened slightly, despite some good economic and pandemic data.

Another solid day for Asian stock markets as the risk swing higher continues, although Chinese shares are stalling.

Via Goldman: Over the last week, the unwind of popular Hedge funds short and long positions triggered a sizable spike in market volatility and raised concerns about the influence of retail investors’ activity.

Another green day on Asian stock markets as the Reddit fizzle continues, with sentiment firming and volatility waning, at least in equities.

This pretty much captures my view.

Wall Street rebounded overnight as the Gamestop short squeeze eased off and sights were set on silver instead.

It’s been a much better start to the trading week then many thought possible with S&P futures indicating a 1% drop at least across Asian stock markets on the open, with many risk currencies gapping down this morning, before a swift reversal has seen risk come back much stronger.

Via Reddit user The Happy Hawaiin which some media are reporting is behind a flashmob silver squeeze this morning.

The short squeeze continued on Wall Street Friday night as the Gamestop debacle spilled over into a selloff across the board on both sides of the Atlantic as nominal gains for the year evaporated.

Via ZeroHedge: As @Compound248 details in this excellent thread, “this is a ‘plumbing’ issue.

Via GaveKal: Here is an anecdote for the “no-inflation” file: in 1998, LTCM, a hedge fund with US$4.7bn in assets under management hit the wall following poor trades on Danish mortgage bonds, Russian government debt and an unfortunate pairs trade on the UK-Dutch listings of Shell.

Well, that was a fun night!

A sea of red out there on Asian stock markets in response to the largish falls on Wall Street overnight from a crazy short squeeze as the professionals (sic) continue to clutch their pearls as Redditors and Robinhooders go after their next target.

Via JPM: A question facing most investors today is the outlook for equities, and more broadly market risk. This ties into the outlook for the COVID-19 recovery, inflation and various technical parameters (such as flows, positioning, volatility and bond-equity correlation).

Via WSJ: Traders piling into AMC are seeking GameStop-like gains in other companies following the recent excitement in social-media groups.

Wall Street’s wobble in the previous session has turned into a full rout overnight with short-exposed hedge funds tipping the major bourses deep into the red.

Risk is wavering throughout Asian stock markets with only Japanese stocks advancing as the USD firms against most of the major currencies in the lead up to tonight’s Federal Reserve meeting.

Via John Hempton in his latest Bronte Capital client letter: In these months some fund managers we admire have had solid double-digit returns. Also, some fund managers we think are gunslingers destined to drop 80 percent or more have had double digit returns (with triple-digit returns a possibility).

Last night saw a wobble in Wall Street despite the IMF upgrading global economic growth projections and a fall in the USD.

Risk is back on the table with Asian stock markets up across the board as the USD reverses its short term strengthening as we start another trading week and look towards the FOMC meeting.

Via MS: A new year.

Jeremy Grantham on the hustings again: A few points: Roughly speaking, I agree with Grantham.

Friday night saw the release of the latest PMI surveys on both sides of the Atlantic, with the US print unexpectedly higher but that economic recovery didn’t help risk markets higher with Wall Street finishing the trading week on a sour note.