Markets Eerily Quiet

Market Trends - 26/06/2015

Although the summer trading months are known for lacking transactional volumes and more limited liquidity, today’s price action is notably quiet. The clock for Greece is running out of time with the June 30th deadline rapidly approaching. The demands from creditors to “sign a deal or else” have not been met with cheer by Greek negotiators as Merkel and Dijsselbloem mandate an agreement by market open on Monday. With no major economic data out today, markets are continuing to trade the trend as the risk of a Lehman style event over the weekend grows. Safe haven assets excluding precious metals are bid, with the US dollar and Swiss Franc benefiting from the largesse of traders eager to hedge against the dangers threatening the Euro Area. Even oil prices are trading within a very narrow range after weeks of 2-3% intraday moves full of momentum. With liquidity absent, more volatility would normally be expected during these sessions.

The one area where volatility is not absent is in Chinese stocks which are seeing momentum chasing herds of traders running for the exits after two-straight sessions of exceedingly volatile trading. The Shanghai Composite dropped a whopping -7.40% during today’s session with the Chinext Index officially entering a bear market after crashing over 8.00% intraday, down over 27% from recent highs in what officially marks bear market territory. Increased regulatory scrutiny of margin accounts and crackdowns on shadow banking have seen precipitous trading action mark the Chinese investing environment. These types of swings are not evidence across the Pacific in the United States despite key benchmarks falling through critical support levels. European stocks are trading lower across the board, carrying over the weakness from the Asian session, but would not necessarily be marked by volatility despite the -0.95% loss in the UK FTSE 100. Trend following is the name of the game until volatility creeps back into the market.


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