European stocks got clobbered yesterday reportedly due to the escalation in Ukraine crisis. Ukraine’s government has launched a military offensive against separatist militants sympathetic to the government of Russia from cities in the eastern Donetsk region (Bloomberg). Ukraine is increasingly at risk of a civil war. And worse, if both Russia and the NATO-US intervenes this raises the risks of world war III.
While such sentiment initially plagued US stocks, all these abruptly reversed when a report saying that the Japanese government is about to release its outlook that will downgrade its ‘overall assessment’ of the economy as private consumption takes a hit from April sales taxes (I must add and inflation). This sent US stocks recovering from the depths of a selloff!
As you can see all three US major stock market indices (Dow Industrial, S&P 500 and the Nasdaq) fashioned out a fantastic simultaneous V-shape intraday recovery.
Ah, don’t you see? Bad news is good news because the Wall Street’s of the world, like sharks, have smelled blood. They expect that the Bank of Japan to impose additional easing to address faltering Abenomics.
As of this writing Japan’s Nikkei is now on a ramp up by more than 1.5% as the USD-yen soar past 102
Financial journalist Michael Lewis recently raised a controversy saying the stock markets has been rigged in favor of High Frequency Trading. Well, this would seem as speck considering how central banks “manage” the financial markets.
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