Wealthy Nations Daily Update - Volatility

As we enter September, volatility remains; Japanese stocks closed the first day of the month down a further 3.84% sparking further selling in the European bourses. At the time of writing the FTSE is down 2.50%, the DAX 2.83% and the CAC 2.62%. However, sovereign bond markets, which usually benefit as a safe haven, are not seeing as much buying as one would have thought. The UK is an outperformer with ten-year yield falling 4.6 basis points, which is more to do with the release of a weaker manufacturing PMI this morning than anything else, German Bunds only off 1 basis point and French bonds down 0.7 of a basis point. You would have thought with stocks seeing red across the board, investors would be moving heavily into these assets. So why are we seeing a lacklustre performance from bond markets?

Wealthy Nations Daily Update - China Equities and Rate Cut.

The boom in Chinese equities which ran for the last half of 2014 and the first half of this year moved the Shanghai Composite Index from 2k to 5k at an alarming pace. Following the past 2 months of drawdown and the 15.5% crash of the past 2 days the index has now dipped back below 3k; meaning ‘only’ a 50% return since mid-2014 as opposed to the 150% return had investors cashed out mid-June. Unlike yesterday, the wider reaction to China’s further losses were mostly sanguine with Europe and US markets retracing most of yesterday’s panic losses, however the Japanese major equity indices were off a further 3-4%.

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