Wall Street fear gauge at 10-year low
CBOE Volatility Index, which measures the market expectations of near-term volatility conveyed by the S&P 500 stock index option prices, falls to a decade low
The CBOE Volatility Index, which measures the market expectations of near-term volatility conveyed by the S&P 500 stock index option prices, fell to a decade low. It hit a low of 9.9 in intraday trading on Monday according to CNBC, and is at the lowest level since February 2007. While the index closed a little above 10, the reducing volatility indicates heightened expectations among investors. It is down by about one-fifth or 21% so far this calendar year. According to the Financial Times, the latest fall in volatility comes amid polls in the French presidential election that continue to suggest low odds of a victory by anti-euro populist Marine Le Pen.
Commercial vehicle sales hit by new BS-IV norms
The Supreme Court’s order banning sale of BS-III (emission norms) compliant vehicles from 1 April has hit commercial vehicle (CV) makers hard. Tata Motors Ltd’s April sales fell by 21% year-on-year with CVs dragging down numbers, although passenger vehicles grew by 23%.
Ashok Leyland Ltd’s sales fell by 30%, while Eicher Motors Ltd reported a 42% decline in sales. Companies are caught in a tough situation as they have to contend with an inventory pile-up of unsold vehicles and the inability to suddenly ramp up production of BS-IV vehicles. The demand for CVs from truck operators, given that the existing fleet in the country is far from peak utilization, has also been relatively weak.
Peso, ringgit flourish and spur equity gains
Better late than never. The Philippine peso and Malaysian ringgit have clambered aboard the Asian currency rally, advancing against the dollar and spurring flows into equity markets. Global funds have poured $581 million into Malaysian stocks and $198 million into the Philippines since the end of March as the countries’ currencies strengthened 2% and 0.5%, respectively.
That’s a dramatic turnaround considering both declined more than 4% in 2016 and hit decade lows this year. The driving forces are slightly different. For the Philippines, investors are encouraged by tax reforms aimed at raising more than $3 billion in annual revenue to fund infrastructure spending. In Malaysia, the recovery in commodity prices has burnished the appeal of equities: the Kuala Lumpur Composite Index has risen for five straight months. Bloomberg