In the financial market, it is often said that you should go big or go home. Along with higher risk comes the promise of higher rewards and some gamers didn’t hesitate to up the ante when the situation called for it, reaping huge returns on their correct market calls. Here are some of the riskiest traders that paid off.
Here’s what happened to the GBP:
- On Thursday, The Markit Purchasing Managers’ Index for the manufacturing sector came in at a higher than expected 53.3, while on Friday, the PMI for the construction industry additionally showed an increase to the previous month. Overall UK consumer confidence has actually additionally shown an increase.
- Following the release of Thursday’s manufacturing PMI the pound increased by 1.1% versus the US dollar, to 1.32737 and versus the euro, it increased by 0.7%.
- On a weekly basis, the GBP/USD increased by 1.3% & the EUR/GBP decreased by 1.7%.
- So although this week, the pound has actually proven resilient since the Brexit vote, it has actually dropped in value by more than 10% versus both currencies since the referendum.
Across the Atlantic the US dollar has actually additionally been feeling the pinch:
Today’s financial calendar is thin but focus will be on the ISM non-manufacturing index for August. Yesterday we saw a sharp increase in the UK PMI service index which jumped from 47.6 to 52.9 back to pre-Brexit levels. Overnight, RBA left rates unchanged, which resulted to AUD/USD maintaining this week’s gains.
The pound moved along with substantial increases through the week as the release of UK economic reports point to recovery following the Brexit vote.
The USD had a rollercoaster ride on Friday after US NFP showed that only 151k jobs were added versus 180k forecasted. The USD initially went through losses on the news, yet managed to quickly recover and complete the week strong versus other major pairs. The Fed has actually been pretty aggressive in its talks regarding the state of growth in the US economy, indicating a potential rate hike as early as September, however the actual jobs figure might derail its plans. This week features Central Bank Rate decisions from Canada, Australia and Europe.
The Brexit hysteria appears to have actually died down, which means traders can focus once again on the fundamentals. Perhaps surprisingly, London’s FTSE 100 Index has actually shot up nearly 14% since the post-Brexit selloff. UK stocks are currently trading at their highest level of the year, and look poised to continue that rally in September. Having said that, below are five UK stocks we’ll be closely following throughout September.
Picking market tops and bottoms can be very risky, especially if this contrarian approach goes versus strong and prolonged trends. Here are some bets on not-so-popular assets in the past years that turned out to be huge winners.
Markets are awaiting one of the most highly anticipated NFP announcements of the year today at 1230GMT. The US economy is expected to have actually added 180k jobs last month, down from the 255k gain recorded in July however close to the 190k standard cited last week by Fed Chair Janet Yellen. The unemployment rate is expected to drop down to 4.8%. The August NFP data will certainly be a key number considered by the US Fed whether to increase interest rates during their forthcoming September policy meeting.
With the United States presidential election just months away, financial market participants are still deciding who to back. While not everyone is pleased with the choice of Hillary Clinton or Donald Trump, history clearly demonstrates that Democrats are better for stock markets than Republicans. While this is a far too simplistic way of deciding which party is better for the economy and finances, the difference in stock market returns between Democrats and Republicans is too big to ignore.
Ray Dalio is the founder of one of the largest hedge funds, Bridgewater Associates. He was part of Time’s 100 Most Influential People of the World list in 2012 and was also listed by Bloomberg as one of the 50 Most Influential People in the same year. As of February 2016, he is said to have actually a net worth of $15.6 billion, ranking as the 30th richest person in the US and the 69th richest person in the world a couple of years back.