* S&P 500 dips, Nasdaq slides ~1.1%, DJI ~flat
* Tech weakest major S&P 500 sector; energy leads gainers
* Euro STOXX 600 index ends down ~1.3%
* Bitcoin, crude gain; dollar ~flat; gold falls
* U.S. 10-Year Treasury yield rises to ~1.65%
Nov 23 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com
JUNK-RATED CORPORATE DEBT GROWTH OUTPACES INVESTMENT GRADE
(1210 EST/1710 GMT)
Corporate debt rated BB-plus or lower by S&P Global Ratings
grew by 7.9% to $5.58 trillion in the first half of 2021,
outpacing growth of 1.6% for investment-grade debt, the credit
rating agency reported this week.
Overall growth of S&P-rated global financial and
nonfinancial corporate debt, including bonds, notes, loans,
revolving credit facilities, and preferred securities, slowed to
3.1% from 3.8% in 2020's first half "when issuers raised
unprecedented funding to bolster liquidity and bridge operations
in response to COVID-19," the report said.
The amount of corporate debt S&P rates grew by more than
$684 billion at $22.8 trillion by July 1 with 76% rated in the
investment-grade category at BBB-minus or higher.
The largest increases were for debt rated in the BBB and B
categories, which jumped by $384.5 billion and $265 billion
respectively, due in part to rating upgrades.
Growth in B-rated debt was fueled by a surge in leveraged
finance issuance, as well as rating upgrades of more than 80
issuers to the B level from the CCC level in the first half of
2021, S&P reported.
(Karen Pierog)
*****
A GREEN FUTURE: PRIVATE FINANCE AND GETTING RETAIL INVESTORS
INVOLVED (1118 EST/1618 GMT)
As the dust settles on COP26, there is a lot that has been
said on what it means for governments, companies and investors,
but the consensus view was that trillions of dollars worth of
funding need to be mobilized to have meaningful hope of averting
the worst of climate change, and that the private sector is key.
It stands to reason that the Asian Infrastructure Investment
Bank (AIIB) is looking to beef up the amount of private capital
it can help put to work on its projects.
Ludger Schuknecht, vice president and corporate secretary of
the AIIB, told the Reuters Global Markets Forum (GMF) the AIIB's
securitization program was "well subscribed", adding that about
a third of participation was from outside Asia itself.
"If you look at the spreads, over six months liable for the
Class A, the AAA-rated one, in the 120-125 basis point
range...So, a good return for those investors who wanted high
rated bonds and a good amount."
Schuknecht said the bank was even "trying to create an
environment for retail investors to also invest in the climate
space," which he added would be a first in Asia.
While climate finance was earlier closely linked with debt
markets and more specifically green bonds earlier, COP26 seems
to have cemented the belief among many investors across the
capital structure that money needs to be allocated in a more
environmentally aware manner.
"Interest is across the range of solutions – discretionary
portfolios, liquid and illiquid funds, structured products,
direct deals," Damian Payiatakis, Head of Sustainable & Impact
Investing at Barclays Private Bank, told the GMF.
"For many investors, the entry points tend to be into
investments where they are already active and familiar. If I
take a step back, sustainability is the next stage of investing,
not simply the latest product or trend," Payiatakis added.
(Aaron Saldanha)
*****
A SMALLER PIECE OF PUMPKIN PIE: MARKIT SHOWS EXPANSION
SLOWDOWN (1054 EST/1554 GMT)
A lone economic indicator released on Tuesday suggests the
growth of business activity in the United States has lost some
momentum.
While the manufacturing sector's expansion
accelerated slightly, growth in services - which
accounts for a larger slice of the total pie - unexpectedly
applied the brakes, according to global information firm HIS
Markit.
Markit's preliminary "flash" purchasing managers' index
(PMI) for November delivered 59.1 reading for goods makers, a
0.7 point increase over October. But the services print defied
consensus by dropping 1.7 points to an even 57, two points lower
than expected.
Taken together, the composite number shed 0.9 points to
56.9.
A PMI reading above 50 indicates monthly expansion.
While the U.S. economy has essentially re-opened for
business, with see-sawing demand for goods versus customer
facing services approaching some semblance of equanimity, the
supply side of the equation remains in intensive care as
shortages of materials and workers continue to constrain
activity.
"The slowdown underscores how the economy is struggling to
cope with ongoing supply constraints" writes Chris Williamson,
Markit's chief business economist. "Input cost inflation spiked
sharply higher in November to reach a new survey high, adding to
pressure for firms to pass the recent surge in costs on to
customers in order to protect margins."
"Average prices charged for goods and services continued to
rise at an unprecedented rate,” Williamson adds.
Compared with global rivals, U.S. and European factory
activity expansion is essentially neck-and-neck, with
merchandise producers across the pond outpacing the U.S. in
output and headcount, but stateside producers enjoying faster
growth in new orders.
And since the end of the pandemic recession - the deepest
and shortest economic contraction on record - China has been a
clear laggard.
On Wednesday, investors will be treated to a veritable
traffic jam of indicators as the markets hightail it out of town
to accommodate the Thanksgiving holiday.
On tap for tomorrow are (deep breath), mortgage demand,
corporate profits, durable goods, GDP, consumer spending, PCE
inflation, jobless claims, inventories, new home sales and
consumer sentiment.
As for Wall Street, a lack of meaningful market-moving
catalysts exerted its gravitational pull on the major stock
indexes, with the benchmark S&P 500 on the road to its third
straight day in the red.
Energy is the outlier on the upside, with spiking
crude prices boosting the sector sharply higher.
(Stephen Culp)
*****
CAN WALL STREET STAGE A COMEBACK? (1015 EST/1515 GMT)
After opening as a mixed bag Wall Street's three major
averages managed to turn positive in Tuesday's early trading
after U.S. HIS Markit data showed U.S. business activity slowed
moderately in November amid labor shortages and raw material
delays, contributing to soaring prices halfway through the
fourth quarter.
However, the S&P 500 and Nasdaq were less
sure of themselves, and have quickly dipped back into the red.
At last glance there were four modestly declining sectors
with tech off most. Communications services,
consumer discretionary and healthcare are
down.
The energy sector is the benchmark's biggest
percentage gainer as oil gained ground to steady near $80 a
barrel after the United States announced plans to release up to
50 million barrels of oil from its reserves to cool the market.
Markets are also still digesting Monday's news that Jerome
Powell was nominated for a second term as Fed Chair and the fact
that expectations were pushed forward on Monday for an interest
rate hike by as soon as June 2022 compared with the previous
expectation for July.
(Sinéad Carew)
*****
LIRA IN CRISIS AGAIN, BUT NOT A GLOBAL CONTAGION JUST YET
(0917 EST/1417 GMT)
After an 11-day losing streak for the lira, the Turkish
currency is now firmly in crisis territory again. The biggest
concerns on investors' minds now are where is the selloff going
to end and what are the chances of the contagion spreading?
Turkey's lira plummeted nearly 15% on Tuesday, while
its benchmark index rose 1.5% due to suddenly cheap
valuations. Turkey's banks have held up well so far, up
19% this month. The broader stocks index is up 17% in November
having scaled record highs.
Given its limited trade and financial links with the rest of
the world, alongside most emerging markets' improved external
positions, economist Simon MacAdam at Capital Economics, writes
that any global spillovers are unlikely. Turkish banks have $10
billion of foreign loans on their books, so domestic banking
strains would not have a big impact on overseas lending.
"The way this would get uglier for the rest of the world is
if President Erdogan were to hold his nerve for long enough and
for the lira to fall far enough to endanger Turkey’s banks,"
writes MacAdam.
Nonetheless, some Spanish and other European banks like BBVA
with Turkish exposure through its Garanti subsidiary may
continue to underperform for the duration of the crisis as they
did in 2018, adds the economist.
(Bansari Mayur Kamdar)
*****
DOW INDUSTRIALS: INSIDE THE LINES (0900 EST/1400 GMT)
Over the past six months or so the Dow Jones Industrial
Average has been trapped between two log-scale trend
lines:
On a weekly basis, the Dow closed above a more than 90-year
resistance line in late March. With this action, the polarity of
the line flipped from resistance to support.
Since then, the Dow has bounced off of it a number of times,
refusing to end a week back below it. It now resides as support
around 34,000.
On the upside, the blue-chip average faces a resistance line
from early 2018. This line capped strength in mid-August and
again earlier this month. It now resides around 36,700.
Meanwhile, over the past six months or so, weekly momentum
has been waning. The MACD hit a more than one-year low in
mid-October, and despite the Dow's early-November thrust to new
highs, the momentum study managed just a tepid rise.
The Dow is now down 2.6% from its 36,565.73 November 8
intraday high. But with the MACD remaining weak, risk remains
for DJI to continue to oscillate down to once again test the
support line.
Ultimately, a weekly close outside the range defined by
these two lines may signal potential for acceleration. Ending
back below the support line can suggest a failed breakout above
a very long-term trend line, with risk then for a major
reversal.
(Terence Gabriel)
*****
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)