Stock trading trends are pointing to high volatility in equity markets and the effects of global conflict.
While the US indices set all-time highs on Wall Street, and as Russia’s benchmark betrayed over the past week a combination of geopolitical and economic alienation from the West, traders are set for an interesting April already.
In terms of stock trading trends, there’s plenty of opportunity for all traders of every level to capilising on.
Stock Trading Trends: Equity Funds in Focus
For the fifth consecutive week ending March 27, US investors put more money than they took out of equity funds, pumping a net $2.6 billion into equities.
This has been fuelled by expectations of three rate cuts in 2024.
As reported by LSEG, weekly net investment was the smallest since the beginning of March, as investors turned cautious ahead of incoming inflation numbers.
Further spurring those hopes was the latest personal consumption expenditures (PCE) data at the end of the week, which showed US prices held steady in February or rose by 1.8%.
This followed disappointing manufacturing and job data for March.
In contrast, US large-cap funds attracted only $6.13 billion, compared with a total purchase for the week ending March 23 of $15.3 billion; small-cap funds also brought in an additional $1.45 billion, while multi- and mid-cap funds sustained withdrawals.
Sector-wise, technology attracted another $1 billion-plus; industrials garnered nearly $900 million; and healthcare was net sold by nearly $802 million.
US bond funds also worked to reverse the outflows they experienced the previous week, buying a net of $3.47 billion, with short- and intermediate investment-grade funds leading the way by $1.88 billion.
Money-market funds attracted a net of $1.33 billion, a total that represents their second week-on-week outflow at $12.08 billion.
Stock trading trends: Wall Street, Gold & USD
Meanwhile, gold prices rose to record levels on April 1 while Wall Street stocks backed away from almost record highs. There are dim hopes of an imminent Federal Reserve rate cut hitting market prices in response to what is emerging as a resilient United States economy.
Overnight, most Asian markets continued a rally led by surging Chinese stocks, while Japanese shares backed away despite firm Japanese data that supports rate hikes, as the yen moved closer to intervention-triggering levels.
The dollar was further bolstered by positive growth in the US manufacturing sector for the first time in four months in December 2022, raising the prospects of intervention as the yen continued to remain weak.
The dollar edged up another 0.55% on the dollar index. Oil prices continued to hover near five-month highs, propelled by fears of supply constraints following OPEC+ cuts and Russian refinery attacks, along with better-than-expected positive Chinese manufacturing data pointing to a likely pick up in demand.
Stock trading trends: Fed to wait and see
Talk of “waiting and seeing” from the Federal Reserve’s chair Jerome Powell, has tempered rate-cutting expectations, while worries over the risks of ‘peacetime’ monetary loosening setting off ‘wartime’ inflation, like in the 1970s, have tempered markets.
Both the US stock indexes and gold reached new peaks as a result. A subtle sell-off in US Treasury bonds foreshadowed major reversals in monetary policy and called into question the Federal Reserve’s ability to accomplish the rate cuts it wants.
Stock trading trends: Nikkei down
In Tokyo, worries about possible intervention in currencies sent the Nikkei down, following a corporate survey reporting a drop in their manufacturers’ confidence.
That gave investors an opportunity for some profit-taking. In commodities, US crude and Brent rose.
The movements illustrate the interplay between economic and policy signals and stock-market reactions.
Stock trading trends: Stocks pull back
After a hot start to the trading day, Wall Street’s major stock indices pulled back early in the afternoon on Monday after far more robust manufacturing data raised Treasury yields, even as expectations for a rate cut by the Federal Reserve in June retreated.
The Institute for Supply Management’s manufacturing PMI for March came in above 50, the first time since September 2022 that the index showed growth, moving up from 47.8 the prior month.
Stock trading trends: US Treasury Yields
The yield on the benchmark 10-year US Treasury note climbed toward its highest level in two weeks to 4.3311%, putting pressure on sensitive equities.
The probability of at least a quarter of a percentage point rate cut in June dipped to about 56% from nearly 66%, according to the CME Group’s FedWatch tool.
That followed the Commerce Department’s release on Friday of the February personal consumption expenditures (PCE) price index, which showed a 0.3% gain, coming in below the median estimate.
Still, Fed Chair Jerome Powell sounded a notably patient note in congressional testimony last week, reiterating that the economy remains on strong footing.
As midday arrived, the major tech stocks were mixed, with some of the biggest names setting new record highs, while others posted declines.
The broader market sank, most notably in the four interest-rate-sensitive sector groups: discretionary, financials, industrials, and health care.
Stock trading trends: S&P 500 Winners and Losers
These sectors were among the biggest losers in the S&P 500’s strong first-quarter advance.
This was pushed by a huge uptake in AI technology and strong corporate earnings. Another factor was trader expectations for an economy in which inflation can be brought under control without causing a recession.
By the close of the day, the major indices had weakened most notably the Dow Jones with its focus on the 30 largest blue-chip stocks, the S&P 500, and the Nasdaq.
By contrast, the semiconductor sector was emerging as a particularly bright spot, with big daily increases in the shares of the biggest names.
Stock trading trends: Third Point Hedge Fund
Daniel Loeb’s Third Point hedge fund racked up more performance in the first quarter against a continued updraft that originated in 2023 and carried into 2024.
Third Point’s Offshore fund rose by 8%, while the Ultra fund added 8.7%, one source who knows the results told me.
Besides equity returns, Third Point venture capital investments and credit strategies helped the year-to-date returns.
Third Point, a hedge fund that uses a variety of investment strategies, including activism, has continued to pressure global companies to make operational improvements.
Stock trading trends: Shares drop
Shares tumbled 22% in 2022, but early gains in 2024 suggest a rebound from those lows; last year, the portfolio grew 3.6%.
New investments made the biggest impact, including Advance Auto Parts and Bath & Body Works, and the electricity and power generation firm Vistra, where Loeb wielded influence to push corporate governance changes while the company acquired a nuclear power generator.
Stock trading trends: Amazon, Meta
Big technology shares, such as Amazon.com and Meta Platforms, were also leaders among the gains.
One of the most watched barometers of trends among hedge fund firms, Third Point now oversees a varied strategy portfolio that, alongside its famous activism strategy, also contains dedicated equity market-neutral, global event-driven, global long/short special situations, and multistrategy strategies.
The firm, run by billionaire investor Louis Moore Bacon, 59, recently spun off a private-credit fund and is preparing the launch of a corporate credit fund this summer.
The firm’s assets under management dipped to $11.5 billion at the end of March from similar numbers in the previous 12 months.
Stock trading trends: Trump Media
Concerns about Trump Media and Technology Group’s ability to service its debt caused the stock to drop 17.8% on Monday, less than a week after its public debut following a merger with a special purpose acquisition company (SPAC).
The company that owns Trump’s Truth Social platform reported net loss of $58.2 million for the fiscal year ending December 31 2023, down from net profit of $50.5 million the year before.
Stock trading trends: Trump Media Revenue Increased
The company’s revenue increased to $4.13 million in the 12 months ending in December 2023 up from $1.47 million in 2022, but, in its filing, it indicates it ‘has substantial doubt about its ability to continue as a going concern’.
The filings showed that they remain considerably in doubt as to Trump Media’s ability to satisfy these obligations at the end of 2023 or in the foreseeable future and reflect anticipated operating losses and negative cash flow in the future as it looks to grow its user base and attract new platform partners and advertisers.
The stock jumped more than 16% on its trading debut on Sunday, getting a boost from individual retail investors and fans of Donald Trump, the former US president, but has since been volatile.
On Monday, it marked its second consecutive losing session.
Stock trading trends: Trump Media Stake
Simultaneously, the aforementioned Delaware court is weighing a lawsuit brought by Trump Media’s co-founders, Wesley Moss and Andrew Litinsky, who say they’re entitled to an 8.6% stake in the company.
Moss and Litinsky claim that Trump Media is now trying to illegally eject them from the company after it began to become profitable.
The company disputes their allegations, in turn charging that the co-founders didn’t earn their ownership stakes by meeting the thresholds set out in the agreement. The company seeks a judicial declaration that would strip the co-founders of their ownership stakes and their corresponding director rights.
Stock trading trends: Moscow Exchange Takes Action
On Monday, the Moscow Exchange announced it would suspend trading of global depositary receipts (GDRs) for the Russian retail group X5 (FIVEDR.MM), at the directive of the Russian government, and early in the trading day X5’s locally listed receipts rose to an all-time high before falling 5.2% by 1330 GMT.
X5, Russia’s leading retailer, announced last Friday that it had been notified of a lawsuit initiated at the arbitration court in the Moscow region by Russia’s Ministry of Industry and Trade, which could limit one of its subsidiaries, and impact X5’s rights to operate.
The contemplated restrictions could force the subsidiary not to vote at shareholder meetings, and limit X5’s ability to transfer shares and receive dividends paid by the subsidiary.
These developments led to the resignation of X5’s CEO Igor Shekhterman and President Yekaterina Lobacheva from the management board.
X5 assured in its statement last Friday that its everyday operations in Russia would continue uninterrupted, but if the court sides with the ministry and orders that the subsidiary’s shares be dispersed to current stakeholders, this could pose ‘a risk to the continuing investment by DR holders in the GDRs, which could adversely affect the market value, profitability and liquidity of the GDRs.
The main Russian stock index hit its highest level since Russia’s full-scale invasion of Ukraine launched on February 24 2022 on Monday.
The same day Ukrainian forces pushed back Russian troops Soldiers of KZSRF Russian Federation National Guard with flags of the Russian Defense Ministry advanced with heavy military equipment, reportedly in territories liberated from Ukrainians in the left-bank area of the Kherson region, in the Kherson region, on 2 March.
As of 1025 GMT, the MOEX Russian index (measured in roubles) rose 0.9% to 3,361.5 points, the bank reported, which was the record high since February 24 2022.