The turmoil currently shaking the richly valued technology stocks in the United States is undoubtedly one of the most rational stock market events of an atypical year 2020. After all, it is rather logical, I would say almost healthy, that consolidation is taking place after an incredible bullish rally.
This does not prevent the multiplication of financial operations, as if companies had held back until September while waiting for sufficient visibility on the impact of the coronavirus. In reality, this is exactly what they did. Given the bottleneck, they must have a fairly optimistic view of the future. Even the IPO market is waking up. Unity, LoanDepot and even TikTok are in sight in the United States, after the arrival with fanfare of Snowflake, whose share price soared 130% on Wednesday for its first day of listing.
At the same time, employment figures are struggling to keep up with stock market trends.
The Federal Reserve is expected to decide within the next two weeks whether to extend the constraints it has imposed on major U.S. banks on dividend payments and share buybacks.
The announcement came as the Fed began its second round of stress tests to determine the resilience of the banking sector to two recession scenarios. The results will be published by the end of the year. These tests ensure that banks are able to lend to households and businesses even in the event of a severe recession. Criteria such as equity or loan losses will be studied over a hypothetical nine-quarter recessionary period. Initial tests earlier this year showed that the banks were sufficiently capitalized. However, in the face of economic uncertainty with the pandemic, the Fed had asked banks to take precautionary measures to preserve capital. It should therefore be known before the end of the month whether these measures will be extended or not.
Today on the agenda, we have German producer prices, quarterly wages in France, British retail sales, the University of Michigan's confidence index and the Conference Board's leading indicators index.