Market Talk November 8th, 2023

Asia –

Chinese inflation figures for October published on Thursday showed a 0.1% decline compared to September and a 0.2% fall from one year, according to official statistics. China’s troubled property sector will be closely watched on Thursday after most major stocks rallied one day earlier following a Reuters report that Ping An Insurance Group had been asked by the Chinese authorities to take a controlling stake in Country Garden Holdings.

Europe –

Britain saw some of the most widespread falls in house prices since 2009 last month, but the declines were slightly slower than in the previous two months and surveyors are less optimistic about the year ahead, a survey showed on Thursday. The monthly report from the Royal Institution of Chartered Surveyors (RICS) echoes house price data from mortgage lenders Halifax and Nationwide, which showed month-on-month rises in house prices in October after months of declines. The RICS House Price Balance – which measures the difference between the percentage of surveyors reporting a rise in house prices over the past three months and those reporting a fall – rose to -63 in October. The figures for September and August were revised up slightly to -67, but were collectively the lowest since March 2009, during the global financial crisis.

US/AMERICAS-

After last week’s explosive rally, fear has gripped the U.S. stock market, and some options experts are urging clients to stock up on portfolio protection while it’s cheap. The S&P 500 rallied 6% from its October lows after posting its biggest weekly gain in nearly a year on expectations that the Federal Reserve is unlikely to raise interest rates further as it seeks to create a so-called soft landing where it is able to beat inflation. without seriously harming growth.

Meanwhile, the Cboe Volatility Index (.VIX), known as a gauge of fear on Wall Street, fell to its lowest level in seven weeks. The cost of hedging stocks has also fallen, suggesting limited demand for downside protection: Investors looking to hedge their portfolios against a 5% drop in the S&P 500-tracking SPDR S&P 500 ETF Trust ( SPY.P ) through the end of the year are paying about half the price required just two weeks ago, a Reuters analysis showed.