By Global shares hit a record high this morning and meme stocks are going bonkers again. It’s all very top of the cycle kind of feel but that doesn’t mean we go for more. Today’s US CPI inflation print is the key event. The market seems braced for a downside surprise so anything a bit hot could kick us back a bit. No one seems to care about President Joe Biden slapping yet more tariffs on China. The irony of which is not lost on us.
The MSCI All Country World Index hit a new all-time high this morning after achieving a fresh record last night. It’s now 6 per cent above the April low and London is at the vanguard of the rally, achieving a fresh record high this morning. It’s now risen about 9 per cent from the April trough after gaining about half a percent in early trade this morning with Experian the top riser with a gain of 8 per cent after reporting growth at “the top end of our expectations”, while Burberry suffered a 4 per cent decline in revenues to weigh on the luxury sector. Mainland European indices were mainly higher early on Wednesday ex-Paris due to the luxury move lower, with the Stoxx 600 hitting a record high. Wall Street rose on Tuesday in spite of produce price inflation coming in hotter than expected. The Nasdaq composite added three-quarters of a percent to hit a record closing high and the S&P 500 was up half a per cent.
Momo trash was soaring again yesterday. GME rose 60 per cent and is about 5 per cent after-hours; AMC rallied 30 per cent and is +10 per cent after-hours and BlackBerry rose 12 per cent and extended another 6 per cent after the close. None finished close to the pre-mkt heights though. It still appears that block trades were light, mostly retail sized 100-share orders so it seems likely that it’s mainly retail driven.
Stocks here were caught up. The read across the Atlantic is indicative of the dysfunction of markets – Ocado soared and other heavily shorted stocks in Europe were among yesterday’s best risers. The thinking is that retail will go after some of them in a Reddit-style attack on shorts; hedge funds that are short will have reacted swiftly to Monday’s moves in New York to cover some of their positions as a precaution. Other stocks with a lot of short interest like SunPower (+60 per cent) and MicroCloud Hologram (+61 per cent) rallied but it wasn’t a case that all of the companies with the highest proportion of outstanding shares currently sold short rose. There is some give back today for Ocado with the stock down 4 per cent early doors.
The Trader is written by Neil Wilson, chief market analyst at Finalto
