Weekly Market Insight

Latest Economic & Market Update 26th June 2020

26th June 2020

Good afternoon, it is 26th June 2020 and here is your economic and market update from BlackBee. 

Graph of the Week: Net Short Positions in S&P500 Futures at Highest Level Since 2011

The net position in US futures markets for non-commercial traders is provided in a weekly report by the Commodity Futures Trading Commission (CFTC). Non-commercial traders include financial institutions, individual investors and hedge funds – anyone who is using the position to profit rather than hedging. Non-commercial traders now hold the biggest net short position in S&P500 futures since 2011 suggesting the expectation of the market to sell-off. In September 2007, the net short position was at a record high before the market crash. In March 2009, net long positions held by non-commercial traders were at record highs just before the beginning of the long bull market. Recently, investors have been growing nervous over a second wave of the coronavirus and the implications it would have on the rate at which the economy reopens. The S&P500 has rallied nearly 38% since lows in March and now stands at +1.92% YTD. The rally has been influenced by FED stimulus and investor’s hopes about the reopening of the economy and is considered to be over extended as the market is dislocated from the real economy.

At a glance:

  • Following a stress test analysis, the FED have capped dividends and share buybacks by major US banks until Q4 2020 at the earliest. The results showed that US banks performed well in the stress test however some risks were uncovered, leading to these measures.
  • The latest number of new jobless claims was higher than expected with 1.48mn people applying. The number of people unemployed in the US remains around 20mn. It is a worrying sign that such a high number of people are losing jobs months after the downturn started.
  • Adding to investors worry about the economy reopening, Texas has halted plans to reopen due to the rise in cases. After a month of allowing companies to reopen, the plan may be reversed.

Best & Worst Performers of Large Cap Stocks on Thursday
Click the image to enlarge

Global Market Update
(as at close of markets 25/06/2020)