IG Group’s Chris Beauchamp: “Equities are making further gains”

We have been heralding the need for brokerages to go down the multi-asset route for some time. Now, this need is more evident than ever before

Last week, the inside line on the newfound volatility within the FX and electronic trading sector had become the subject of discussion among some of the more prominent market analysts within brokerages.

IG Group’s Chris Beauchamp highlighted the importance of multi-asset capability in last week’s observations, as knee-jerk responses to news during this extremely unusual year, along with continual brainwashing from governments that entire populaces must be locked up, fear mongering and sudden revelations of a few miraculous vaccinations which may be foist upon the public en masse in record time and without proper testing have resulted in massive fluctuations in major currencies, and in the stocks of the pharmaceutical companies that make these claims about a vaccine against the most politicized ‘health’ issue in history.

The whole dynamic is new to the financial markets economy worldwide, as never in history has there been a global government controlled attempt to suppress billions of people and decimate economies such as this.

Tabloid newspaper journalists with a penchant for sensationalist headlines stating that Pfizer and Moderna spent the entirety of last week almost frothing at the mouth over some unknown quantities that are likely to be bought by governments worldwide with taxpayers money and possibly enforced by law onto as many of us who cannot run away in time has understandably caused the stock markets – most big pharma being publicly listed – to rally tremendously.

Mr Beauchamp looked at all of this pragmatically, and how the news stories were creating advantageous volatility in the corporate equities markets.

Today, Mr Beauchamp observed that a week later, equities are making further gains in trading this morning, with the FTSE 100 up 50 points and US futures looking brighter too.

“Stocks continued in their broadly positive frame of mind on Tuesday, making steady gains after another good session in Asia overnight and a US trading day that saw a late rebound on news that Donald Trump was finally allowing at least part of the transition to go ahead” he said.

“Signs of movement in the US political deadlock have combined with the steady drip of vaccine news to underpin a market that has yet to breach the highs seen earlier in the month” observed Mr Beauchamp.

“But the trickle of good news stories has helped to hold markets near to those highs, leaving them well-placed to push higher into December. A fall in France’s business climate index reminds investors that we are not out of the woods yet, although the resilience of the manufacturing reading provides hope that the overall global economy is holding up relatively well” he said.

“Compass Group had already seen its shares rally in November thanks to the vaccine news, and after a period of consolidation annual results have given the stock a boost in early trading. The shares should rally further as the focus shifts from lockdowns to reopening around the globe, driven both by vaccines and the arrival of spring which should make it easier to keep infection rates under control” said Mr Beauchamp.

“After hitting a four-and-a-half low in March and then moving sideways throughout the summer it looks like Compass has rediscovered the momentum that made it such a winner over the past ten years” he concluded.

The first two decades of this Millennium may well have been very stable and certainly have lacked volatility, creating something of a degree of apathy among FX brokerages with off-the-shelf platforms from firms such as MetaTrader, in that there has not been the incentive to give up the affiliate marketing style b-book spot FX approach that has been their modus operandi since said platform arrived on the market in 2004, however the need for multi-asset capability has been emphasized on these pages many times, and now perhaps that is relevant more than ever.

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