LIVING MARKETS A green future: private financing and participation of retail investors

  • DJI moves forward; S&P 500, Nasdaq down; banks rally, tokens, NYFANG slide
  • Energy Leads S&P 500 Sector Gainers; weakest tech group
  • Euro STOXX 600 index falls ~1.3%
  • Bitcoin, gross profit; dollar ~ flat; gold falls
  • 10-year US Treasury yield rises to ~1.65%

Nov 23 – Welcome home to real-time coverage of the markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

A GREEN FUTURE: PRIVATE FUNDING AND ENGAGING RETAIL INVESTORS (11:18 EST/16:18 GMT)

As the dust settles on COP26, much has been said about what it means for governments, businesses and investors, but the consensus view was that trillions of dollars in funding must be mobilized to have any meaningful hope of avoid the worst. of climate change, and that the private sector is key.

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It stands to reason that the Asian Infrastructure Investment Bank (AIIB) would seek to increase the amount of private capital it can help put to work on its projects.

Ludger Schuknecht, vice president and corporate secretary of the AIIB, told Reuters’ Global Markets Forum (GMF) that the AIIB’s securitization program was “well underwritten”, adding that about a third of the holding came from outside Asia.

“If you look at spreads, over six months responsible for Class A, AAA rating, in the 120-125 basis point range… So a good return for those investors who wanted highly rated bonds and a good Amount.” .”

Schuknecht said the bank was even “trying to create an environment for retail investors to also invest in the climate space,” adding that it would be a first in Asia.

While climate finance was previously closely linked to debt markets, and more specifically green bonds, COP26 appears to have cemented the belief among many investors across the capital structure that money needs to be allocated in a more sustainable way. environmentally conscious.

“The interest is in the full range of solutions: discretionary portfolios, liquid and illiquid funds, structured products, direct deals,” Damian Payiatakis, head of sustainable and impact investing at Barclays Private Bank, told the GMF.

“For many investors, entry points tend to be investments they are already active in and familiar with. If I take a step back, sustainability is the next stage of investing, not simply the latest product or trend,” Payiatakis added.

(Aaron Saldanha)

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A SMALLER PIECE OF PUMPKIN PIE: MARKIT SHOWS DECREASE IN EXPANSION (10:54 EST/15:54 GMT)

A single economic indicator released on Tuesday suggests that growth in business activity in the United States has lost some momentum.

While the manufacturing sector (USMPMP = ICE) expansion accelerated slightly, growth in services (USMPSP = ICE) – which represents a larger slice of the total pie – came to an unexpected halt, according to global information firm HIS Markit.

Markit’s flash flash Purchasing Managers’ Index (PMI) for November gave a reading of 59.1 for goods makers, a 0.7 point increase from October. But services printing defied consensus by falling 1.7 points to 57, two points lower than expected.

Overall, the composite number lost 0.9 points to 56.9.

A PMI reading above 50 indicates a monthly expansion.

While the US economy has essentially reopened for business, with oscillating demand for customer-facing goods versus services approaching a semblance of equanimity, the supply side of the equation remains in deepest care as the shortage of materials and workers continues to restrict the activity.

“The slowdown highlights how the economy is struggling to cope with current supply constraints,” writes Chris Williamson, chief business economist at Markit. “Input cost inflation rose sharply in November to hit a new survey high, increasing pressure for companies to pass on recent cost increases to customers to protect margins.”

“Average prices charged for goods and services continued to rise at an unprecedented rate,” adds Williamson.

Markit Flash PMI

Compared to global rivals, the expansion of manufacturing activity in the US and Europe is essentially equal, with commodity producers across the pond outpacing the US in output and number of employees, but producers Americans enjoy faster growth in new orders.

And since the end of the pandemic recession, the deepest and shortest economic contraction on record, China has clearly been a laggard.

Markit Global Manufacturing PMI

On Wednesday, investors will face a veritable indicator traffic jam as markets head out of town to adjust to the Thanksgiving holiday.

On tap for tomorrow are (deep breath), Mortgage Demand, Corporate Earnings, Durable Goods, GDP, Consumer Spending, PCE Inflation, Jobless Claims, Inventories, New Home Sales and consumer confidence.

As for Wall Street, the lack of significant market-moving catalysts exerted its gravitational pull on the major stock indices, with the benchmark S&P 500 index on track for its third consecutive day in the red.

Energy (.SPNY) is the outlier to the upside, with rising crude prices driving the sector considerably higher.

(Stephen Guilp)

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CAN WALL STREET COME BACK? (1015 EST/1515 GMT)

After opening as a mixed bag, all three major Wall Street averages managed to turn positive in early trading Tuesday after US HIS Markit data showed US business activity slowed moderately in November amid of labor shortages and delays in raw materials, which contributed to the increase in prices in the middle of the fourth quarter. Read more

However, the S&P 500 (.SPX) and Nasdaq (.IXIC) they were less sure of themselves, and quickly plunged back into the red.

At last glance, there were four sectors in modest decline with technology (.SPLRCT) out of the majority. communications services (.SPLRCL)discretionary consumption (.SPLRCD) and health (.SPXHC) they are down

the energy sector (.SPNY) It is the biggest percentage gain in the benchmark index as oil gained ground to stay near $80 a barrel after the United States announced plans to release up to 50 million barrels of oil from its reserves to cool the market.

Markets are still digesting Monday’s news that Jerome Powell was nominated for a second term as Fed chairman and the fact that expectations of an interest rate hike for June 2022 were boosted on Monday compared to the previous expectation for July. Read more

(SineadCarew)

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LIRA IN CRISIS AGAIN, BUT NOT GLOBAL SPREAD YET (0917 EST/1417 GMT)

After an 11-day losing streak for the lira, the Turkish currency is now back in crisis territory. The biggest concerns on investors’ minds now are where the sell-off will end and what are the chances of contagion spreading.

Turkey’s lira plunged almost 15% on Tuesday, while its benchmark index (.XU100) rose 1.5% due to suddenly cheap valuations. the banks of turkey (.XBANK) they have held up well so far, up 19% this month. The broader stock index rose 17% in November and hit record highs.

Given their limited trade and financial links with the rest of the world, coupled with the improving external positions of most emerging markets, economist Simon MacAdam of Capital Economics writes that global spillovers are unlikely. Turkish banks have $10bn in foreign loans on their books, so domestic banking tensions would not have much of an impact on foreign lending.

“The way this would get uglier for the rest of the world is if President Erdogan held his nerve for long enough and the lira fell enough to put Turkey’s banks in jeopardy,” writes MacAdam.

However, some Spanish and other European banks such as BBVA with Turkish exposure through its subsidiary Garanti may continue to underperform during the crisis as they did in 2018, adds the economist.

(Bansari Mayur Kamdar)

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DOW INDUSTRIALS: INSIDE THE LINES (0900 EST/1400 GMT)

In the last six months or so, the Dow Jones Industrial Average (.DJI) has been caught between two logarithmic scale trend lines:

DJI11232021

On a weekly basis, the Dow closed above a 90-plus year resistance line in late March. With this action, the polarity of the line changed from resistance to support.

Since then, the Dow has bounced several times, refusing to finish a week below it. He now resides as support around 34,000.

On the upside, the blue-chip average has been facing a resistance line since early 2018. This line strengthened in mid-August and again earlier this month. It now resides around 36,700.

Meanwhile, for the past six months, weekly momentum has been tapering off. The MACD hit a more than a year low in mid-October, and despite the Dow reaching new highs in early November, the momentum study saw a slight rise.

The Dow is now down 2.6% from its Nov. 8 intraday high of 36,565.73. But with the MACD remaining weak, the risk of DJI continuing to swing lower to once again test the support line. Read more

Ultimately, a weekly close outside of the range defined by these two lines may indicate a potential acceleration. Finishing below the support line again may suggest a failed break above a very long-term trend line, with the risk of a major reversal.

(Terence Gabriel)

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Terence Gabriel is a market analyst at Reuters. The opinions expressed are yours

Our standards: The Thomson Reuters Trust Principles.

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