Stocks: “growth Stocks”, the reaction to Merkel and new loss market
American indexes on Monday were again under pressure, overwriting the may lows on the S&P500 index. By the end of the session, the loss amounted to 0.7%, while the oscillation amplitude remains elevated: the graph is at 3.8% in just a few hours.
Profit-taking put the Quartet FANG (Facebook, Amazon, Netflix, Google) under the main blow, taking away from their total capitalization is about 600 billion, the Main driver of weakening on Friday and Monday were Amazon shares, which have lost more than 14% after reporting weak.
Thus, the key indices get support during downturns: in the stock markets, outside the current attenuation shows a change of trend. “Growth shares”, an example of which is the FANG, at risk of giving up shares with good earnings and dividends.
Securities that are focused on creating value for shareholders, is in focus of the market, the aging economic cycle. The next phase may be counter-cyclical demand for paper, which presents companies of the military-industrial complex, manufacturers of medicines and foods.
It is worth noting that buy indices on dips, coupled with strong macroeconomic data from the United States, do not allow to speak about a major sale, but only on the change of priorities among investors.
On Tuesday morning, the dynamics of the Asian platforms indirectly confirms our idea. The Nikkei index gaining 2.2%, futures on the S&P500 rising 0.6% and the Japanese yen (a good barometer of demand for risks) losing 0.8 percent, pointing to continuing global investors pull buying depreciating securities.
The dollar index is slowly gaining momentum, settling at 96.50 – one step away from the highs of mid-2017. The main reason was the weakening of the Euro, the driver of which was the fears over the political situation in Germany, where Merkel has promised to resign as head of the CDU and to leave the post of Chancellor after 2021.