Saturday 30 May 2020

Weekend update - World equity markets

It was a very mixed month for world equity markets, with net monthly changes ranging from +8.6% (Brazil), +8.4% (Russia), +8.3% (Japan), +6.7% (Germany), +4.9% (Australia), +4.3% (USA), -0.3% (China), -1.9% (South Africa), -3.8% (India), to -6.8% (Hong Kong).

Lets take our regular look at ten of the world equity markets.

USA - Dow

The mighty Dow settled +1037pts (4.3%) to 25383. The key 10MA stands at 26226, and (under my criteria) May still made for a bearish monthly settlement. Note the MACD (green bar histogram) cycle, as price momentum is starting to tick back upward. Even if price continues broadly upward, its going to take at least 5-6 months before momentum turns positive.

Germany – DAX

The economic powerhouse of the EU - Germany, saw the DAX settle +726pts (6.7%) to 11584. A bearish monthly settlement under the 10MA.

Japan – Nikkei

The Japanese market climbed very powerfully higher, settling +1684pts (8.3%) to 21877, a notable close above the key 10MA. At the current rate, momentum will turn positive by late July/August.

Brazil – Bovespa

Brazilian equities lead the way higher in May, settling +6896 (8.6%) to 87402, although that still made for a bearish monthly settlement under the 10MA.

Russia - RTSI

Russian equities settled +94pts (8.45) to 1219. The close above the 1200 threshold is s/t bullish, and offers a challenge to re-take the key 10MA in June/July.

India – SENSEX

Indian equities continued to struggle, settling -1293pts (3.8%) to 32424. A bearish monthly settlement under the 10MA.

China – Shanghai comp'

China equities struggled, settling -7pts (0.3%) to 2852. A fourth consecutive bearish monthly settlement under the 10MA.

South Africa – Dow

The South African market struggled, settling -29pts (1.9%) to 1503. A bearish monthly settlement under the 10MA.

Hong Kong – Hang Seng

Hong Kong equities settled powerfully lower by -1682pts (6.8%) to 22961. A bearish monthly settlement under the 10MA. A fifth consecutive bearish monthly settlement under the 10MA.

Australia – AORD

Australian equities climbed for a second month, settling +274pts (4.9%) to 5872, but that still made for a fourth consecutive bearish monthly settlement under the 10MA.


Six world equity markets settled net higher for May, with four net lower.

Brazil, Russia, and Japan lead the way upward, with China, South Africa, India, and Hong Kong continuing to struggle.

Nine markets remain under their respective monthly 10MA, the exception was Japan.

Looking ahead

There will be a light sprinkling of earnings, but a fair amount of econ-data, especially in terms employment... or rather, the lack of.


M -


M - PMI/ISM manu', construction
T - Vehicle sales
W - ADP jobs, PMI/ISM serv', Factory orders, EIA Pet'
T - Weekly jobs, productivity/costs
F - Monthly jobs, consumer credit

Full moon will be Friday June 5th

Final note

Although the Dow didn't manage a bullish monthly settlement above the monthly 10MA, the SPX and Nasdaq comp' notably did. On balance, the Dow can be expected to follow within the next few months.

Whilst the lockdown restrictions are being broadly lifted, its left a broken and deeply traumatised populace, especially within Europe and North America. The collapse in USA GDP across Q1/Q2 likely amounts to around -40%. Even if you assume half of that is recovered in Q3/Q4, that still makes for a devastating net 2020 decline of -20%. On any basis... 2020 is to be seen as a depressionary year.

Yet the equity market doesn't care, as its being juiced by $3trn of Fed QE, never mind the ongoing REPOs. We didn't forget about the latter, did we? Ironically, even the mainstream cheerleaders appear somewhat embarrassed at the strength of equities, whilst the economy remains in a horrific state.

Such a depressionary economy and a traumatised populace make for a tinder box of social unrest. The death of George Floyd has been the spark, and some are starting to recognise that this summer is going to be a hot one.

The market will be unsettled by such mass social unrest, if only briefly. After all, more US Govt' stimulus appears on the menu, and the market will be delighted with another few trillion of Fed QE.

There is increasing background chatter about eventual inflation and a jump in bond yields/rates, but for now... there are far more important things to focus on. We have truly wild times ahead... in the twilight zone.

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Have a good weekend
*the next post on this page will likely appear 5pm EDT on Monday.