FIFA World Cup Affects The Stock Markets

According to many years of statistics, the FIFA World Cup has a big influence on the mood of stock investors.

The number of transactions declined sharply

During the 2010 World Cup held in South Africa, many matches were played at the same time as the trading hours of many stock markets around the world. According to ECB statistics, over 15 large stock markets including Germany, England, France, Italy, Spain, Denmark, Netherlands, America, South Africa, Argentina, etc, there are 3 points worth noting:

  • In the market of some countries, every game has a national team (such as England or France) participating, the average number of orders is reduced by 45% and the volume of trading shares is reduced by 55%.
  • The market is affected by the matches. Specifically, after a match, each country’s stock index fell an average of 5%. This reduction was statistically significant at lunchtime after the morning session and many investors were not paying attention.
  • The heat of the global stock market goes against the World Cup matches. In more than 20% of the time the games were played, global stocks fell. Investors seem to be willing to spend more money on alcohol and popcorn than focus on price lists during this time.

Another 2007 study also showed that during the World Cup, a defeat of the national team could make that national stock market drop sharply the next day.

The slight increase in the stock market of the winning country

After the World Cup, markets with national teams that have won the championship have always gained points since 1974. The only external case for Brazil in 2002, the rest of those markets rose immediately after that to the average. 3.5% and maintained for 3 months.

The stock market of the losing country lost points

In the Goldman Sachs report, 7 out of 9 stock markets of the losers in the final also suffered a sharp decline with an average decrease of 5.6% in the following three months.

Chinese Stocks Fell Sharply as The Government Reduced Demand Stimulus

China’s stock market on April 25 saw the biggest drop in the past 6 weeks due to the growing concern of investors about the government’s ability to cut economic stimulus measures.

According to Bloomberg, the Shanghai Composite Index closed with a fall of 2.4%, bringing the total decrease from the beginning of the week to 4.5%. With such a decline, this week could become the strongest week of the index since the beginning of the year.

Stocks of telecommunications, technology, and consumer goods were not essential to lead the fall of the whole market. For every 10 stocks that have declined, there will be 1 gainer. Along with that, the exchange rate of the RMB against the US dollar dropped to the lowest level since the beginning of the month.

The mood of Chinese securities investors worsened from last week. After a meeting of the Politburo, the market raised rumors that the Government will cut measures to support the economy.

Earlier, growth stimulus measures have become the factor that led Chinese stocks to increase the world’s strongest since the beginning of the year. In the past year, Chinese stocks plunged due to the slowing economy and the US-China trade war.

In recent days, there are many forecasts that the US and China are about to come to a trade agreement. However, this assessment is not enough to lift the psychology of Chinese securities investors.

Strategist Zhang Gang of Central China Securities said that concerns about the possibility of policy shift are negatively affecting the market. Investors can hardly find any industry stocks that help them earn money at this time, so they feel an urgent need to leave the market.

The decline of Chinese stocks took place despite PBoC claims there was no change in monetary policy stance and no intention of tightening or easing policies. Northeast Securities strategist Zhengyang Shen commented that it seems that investors are rushing to sell stocks to take profits, taking into account changes in expectations of government stimulus measures.

US Stock Market This Week Increased Sharply

The US stock market closed near a record high on Friday after the country’s biggest bank – JP Morgan Chase announced better business results than expected.

According to Reuters news agency, with this rally, the S&P 500 is now less than 1% of the record high set in September last year. After the sell-offs at the end of last year, all three major indexes of US stocks in the first quarter of 2019 had the strongest increase in nearly a decade. However, this April, the market moved to a sideways trend before entering the first quarter business reporting season.

As one of the opening companies for the reporting season, JPMorgan Chase offers revenue and profit margins far beyond analysts’ forecasts. These figures help ease investors ‘previous concerns about the potential decline of listed companies’ profits. At the close, JPMorgan Chase gained 4.7% leading the rise of banking stocks.

Analysts now forecast the Q1 earnings of S&P 500 firms to fall 2.3% over the same period last year and improved compared to last week’s forecast. This will be the first time to reduce quarterly profits of Wall Street listed companies since 2016. However, among the S&P 500 companies that have announced their business results so far, there are 79, 3% gave results beyond the forecast.

Walt Disney shares rose 11.5%, reaching the highest level of all time, becoming the biggest boost for the rise of Dow Jones and S&P 500 after the company offered the price for online video transmission service. soon to be deployed. Netflix, Walt Disney’s rival in online video streaming, slipped 4.5%.

Closing the session on Friday, S&P 500 increased by 0.66%, reaching 2,907.41 points; Dow Jones increased 1.03%, reaching 26,412.3 points; and Nasdaq rose 0.46% to 7,984.16 points. Both Nasdaq and Dow Jones are currently about 1.5% lower than the record close.

For the whole week, the S&P 500 increased by 0.5%, Nasdaq increased by 0.6%, and Dow Jones fell by 0.1%. This is the third consecutive week of the S&P 500 and Nasdaq. Financial stocks were the biggest gainers this session, with an increase of 1.9% thanks to the positive business results report of JPMorgan Chase.

U.S. Stocks Declined Due to The Risk of Global Economic Recession

Because of worries about the global economic recession, investors have transferred money to the bond market.

At Monday’s trading session, the US stock market fell after data showed that global economic growth weakened. Investors meanwhile continue to worry about yield curve. However, the Dow Jones index rose when Boeing stocks rebounded after many recent price declines.

However, the market did not react much to the news that Robert Muller could not get evidence that Russia intervened in the 2016 presidential election. At the close of Monday’s trading session, the S&P 500 dropped 2.35 points or 0.08% to 2,798.36 points. Technology and financial stocks declined. The Nasdaq index fell 5.13 points to 7,637.54 points. Dow Jones index increased by 14.51 points to 25,516.83 points.

Market movements began to turn upside down when Bloomberg reported that US officials were worried that China might disagree with US requirements in negotiations. The source also said that Chinese negotiators said they did not receive an agreement to ensure that the US would completely remove tariffs on Chinese goods after signing the agreement.

The US stock market still focuses on the worries about the global economic recession, which began to rise from Friday when a series of large-scale water production indicators such as Europe and the US signaled the slowdown. Data from the US showed that the US manufacturing industry in March 2019 fell to its lowest level in 21 months.

On Monday, Asian stock markets fell, European stock markets weakened. Therefore, investors in worries have transferred money to the bond market. The volatility of the yield curve, when long-term bond yields fall below the short-term bond yields, is seen as a sign that the economic recession is approaching.

Figures from Europe show that the German business confidence index rose to 99.6 in March 2019 from 98.3 the previous month. This is information from Dow Jones Newswires. Chicago Fed President Charles Evans said he still needs to be cautious to see how the data will signal before deciding on interest rates moves.

Chinese Stocks Fell The Worst in 2018

According to Bloomberg, the Shanghai Composite Index has dropped by nearly 25% compared to the beginning of the year, making China a big stock market with the strongest decline in the world 2018.

The booming trade war between the US and China is seen as the main reason why Chinese stocks “evaporate” $ 2.3 trillion worth of capitalization this year.

Along with that, the debt reduction campaign in the economy pursued by Beijing has caused the debt margin on the stock market to fall to about one third compared to the peak in 2015.

Foreign investors continue to buy listed shares in the mainland China market through connection with Hong Kong stock, and Chinese state funds are supposed to intervene in the market to support prices. share. However, the indexes of Chinese stocks have continuously dropped sharply.

In addition to the US-China trade war, Chinese securities investors are also concerned about the slowdown of the domestic economy.

The $ 2.3 trillion capitalization decline of Chinese stocks this year was the strongest since Bloomberg began saving data on this market in 2002. The similar near capitalization of Chinese securities occurred. came into the global financial crisis 10 years ago, when the Shanghai Composite Index dropped 65%.

With the decrease in capitalization, China this year ceded the position of the second largest stock market in the world to Japan.

Along with the decline of the market is the decline of trading volume. The daily average trading volume of the Shanghai and Shenzhen exchanges combined has dropped to about 369 billion yuan, equivalent to $ 54 billion, the lowest level since 2014.

In Thursday’s session, only about 263.8 billion yuan of votes were transferred on both exchanges, about one-tenth of the peak in 2015.

China’s debt reduction campaign has achieved some results, at least in the stock market because of speculative activity.

The total outstanding securities margin is only about 756 billion Yuan on Tuesday this week, about 1/3 of the peak 3 years ago. In 2015, Chinese securities investors borrowed collateral at a record level to buy stocks, leading to a stock bubble.

Many loss investors have fled the Chinese stock market this year. A total of 75 mutual funds with a focus on Chinese securities dissolved in the year, according to Bloomberg data, the highest level ever since the data began to be recorded in 2007. Over the past 11 years , there are 88 Chinese securities mutual funds come to the dissolution outcome.