Home' Trinidad and Tobago Guardian : July 20th 2014 Contents SBG11 STOCKS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt JULY 20 • 2014
Volatility spiked on Thursday
after the tragedy of a downed
civilian jetliner in Ukraine
and the mounting death toll
in Gaza and Israel interrupted
the summer trading slum-
ber.Still, the bears may have to wait a while to
call the start of a correction.
Uncertainly took over Wall Street Thursday
as investors fled stocks, giving the S&P 500
its first decline of more than 1.0 per cent in
three months. The VIX posted its biggest one-
day percentage increase since April 2013, surg-
ing 32 percent. Volume jumped 20 per cent
compared to the average so far this month.
Friday s rebound, however, suggests that
the market s attention to Ukraine and Gaza
will be limited unless a wider conflict erupts,
with investors instead keeping their focus on
"It s one thing to add to the geopolitical
risk premium; that s how you get a 1.0 per
cent move," said George Pearkes, an analyst
at research firm Bespoke Investment Group
in Harrison, New York.
"But it s another thing to say we re going
to be in a bear market because of some conflict
between the United States and Russia, or the
West and Russia. For that to happen, you d
have to see some trade war but we don t see
that as likely."
World leaders demanded a credible inves-
tigation into how a Malaysian airliner with
298 people on board was shot down over east-
ern Ukraine. Meanwhile, Gaza s Palestinians
hunkered down as Hamas militants urged defi-
ance after Israel sent forces into the strip after
days of cross-border fire.
Investors looking for the market to keep
rising should also temper expectations. Bespoke
looked at 22 past instances when the VIX
jumped by 30 per cent or more and found
that one week after such a move, the S&P
500 is up, on average, about 0.77 per cent.
Most of that move comes on the following
day, though, when the S&P rises an average
of 0.73 per cent. The previous large VIX jump,
of more than 40 per cent, was in April 2013
after a bombing at the finish line of the Boston
The weekly gains tend to be even more
muted in the instances when a 30 per cent
gain comes when the VIX itself is below 20;
just a 0.51 per cent rise.
That makes Friday s rebound significant: a
1.0 per cent rise after a 1.2 per cent drop sug-
gests investors have almost completely
shrugged off the news. To some, that s a worry
about the market s current mindset.
"I guess my explanation would be the (Fed-
eral Reserve) has created a bubble," said Michael
O Rourke, chief market strategist at JonesTrad-
ing in Greenwich, Connecticut.
"There s nothing out there right now indi-
cating the Fed s going to change anything and
that s why, when we have these dips, there s
always buyers around." Reuters
How the Dow Jones industrial
average did Friday
US financial markets finished higher Friday,
with earnings from Google, Honeywell and
other big companies lifting the market. The
gains helped wipe out much of the stock mar-
ket s losses from the day before, when the
downing of a passenger jet over eastern Ukraine
and Israel s launch of a ground offensive into
Gaza rattled markets.
The Dow Jones industrial average rose
123.37 points, or 0.7 per cent, to close at
The Standard & Poor s 500 index gained
20.10 points, or 1.0 per cent, to 1,978.22.
The Nasdaq composite index climbed
68.70 points, or 1.6 per cent, to 4,432.15.
For the week:
The Dow is up 156.37 points, or 0.9 per
The S&P 500 is up 10.65 points, or 0.5
The Nasdaq is up 16.66 points, or 0.4
For the year:
The Dow is up 523.52 points, or 3.2 per
The S&P 500 index is up 129.86 points,
or 7.0 per cent.
The Nasdaq is up 255.56 points, or 6.1
per cent. Reuters
LONDON--- Markets settled down Friday
but jitters over the downing of a Malaysian
jetliner over Ukraine remained at the fulcrum
of investors thoughts.
All 283 passengers and 15 crew members
aboard the Amsterdam-to-Kuala Lumpur flight
were killed in Thursday s crash. US authorities
and aviation experts say the Boeing 777 was
likely brought down by a ground-to-air missile,
but so far there is no proof of who fired it.
Ukraine and the insurgents blame each other.
News of the crash weighed on markets on
Thursday and for much of Friday s session
before some positive momentum at the US
"The Dow Jones retook the 17,000 handle
again this afternoon, proving yet again that if
traders want to find resilience in this market
then they must look to US indices," said Alastair
McCaig, market analyst at IG.
In Europe, the FTSE 100 index of leading
British shares closed up 0.2 per cent at 6,749.45
while the CAC-40 in France rose 0.4 per cent
to 4,355.31. Germany s DAX bucked the trend
to close 0.4 per cent lower at 9,720.02.
In the US, the Dow Jones industrial average
was up 0.6 per cent at 17,071 while the broader
S&P 500 index rose 0.7 per cent to 1,973.
In Asia, Tokyo s Nikkei 225, the regional
benchmark, tumbled 1 per cent to 15,215.71
and Hong Kong s Hang Seng fell 0.3 percent
to 23,454.79. South Korea s Kospi was down
0.1 per cent at 2,019.42. China s Shanghai
Composite inched up 0.2 per cent to 2,059.07.
Malaysia s benchmark stock index fell 0.4
per cent to 1,876.21. Shares of Malaysia Airlines
plummeted 11 per cent. It was the second dis-
aster involving the Malaysian flag carrier this
On March 8, a Malaysia Airlines Flight 370
vanished about an hour after taking off from
Kuala Lumpur, spawning an international mys-
tery that remains unsolved.
Oil prices settled after rising strongly on
Thursday, with the benchmark New York rate
up 3 cents at US$103.22 a barrel. Among cur-
rencies, the euro was 0.1 per cent lower at
US$1.3500 while the dollar rose 0.2 per cent
to 101.38 yen. AP
Markets steady but Malaysia jet jitters remain
day does not a
Traders Kevin Lodewick, left, and Edward Landi work on the floor of the New York Stock
Exchange Wednesday, July 16, 2014. US stocks are rising Wednesday on second-quarter
earnings reports and deal news. Investors are also keeping an eye on Federal Reserve Chair
Janet Yellen, who is testifying to Congress for a second day..
A currency trader reacts as he works at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, on
July 11, 2014. Asian stock markets were muted Friday, following the lead of Wall Street traders spooked by worries about the soundness of a
bank in Portugal that raised the specter of more financial turmoil in Europe. South Korea's benchmark Kospi dropped 0.70 per cent at 1,988.74.
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