Market Reaction

Extracted Attributes

• Definition

  The response of the market to firm commitment offerings by companies, where the market either negatively discounts the price of shares or positively reacts to equity private placements.

• Sentiment Indicators

  Proportion of investors expressing bearish (negative) sentiment.

• Typical Manifestations

  Sharp decline in currency value (e.g., pound sterling), impact on supply chains, decline in ocean freight, stock index corrections.

• Key Factors (Trade Policy)

  Aggressive tariff policies, particularly against China.

• General Influencing Factors

  Concerns over tariffs, inflation, economic growth, uncertainty about government policy, investor sentiment.

• Market Correction Threshold

  A major stock index declines by more than 10% (but less than 20%) from its most recent peak.

• Key Factors (UK Mini-budget)

  Increased government borrowing, substantial tax cuts, absence of independent Office for Budget Responsibility (OBR) forecast.

Timeline

• Plan announced to increase UK corporation tax from 19% to 25% from April 2023 (later reversed by mini-budget and then reinstated). (Source: Wikipedia)

  2021-03-XX

• Increase in National Insurance came into effect (later reversed by mini-budget). (Source: Wikipedia)

  2022-04-XX

• UK Chancellor Kwasi Kwarteng delivered 'The Growth Plan' (mini-budget), leading to a sharp fall in the value of the pound sterling against the US dollar due to negative market reaction. (Source: Summary, Wikipedia)

  2022-09-23

• The International Monetary Fund (IMF) issued a rare critical statement, urging the UK government to reconsider proposed tax cuts due to concerns about increasing inequality. (Source: Summary, Wikipedia)

  2022-09-23

• The planned abolition of the 45% tax rate, initially part of the mini-budget, was reversed following widespread negative response. (Source: Wikipedia)

  2022-10-03

• Prime Minister Liz Truss asked Kwasi Kwarteng for his resignation and appointed Jeremy Hunt as the new Chancellor. (Source: Wikipedia)

  2022-10-14

• Following Jeremy Hunt's appointment as Chancellor, the majority of the mini-budget's tax cuts were reversed, which resulted in a positive market reaction. (Source: Summary, Wikipedia)

  2022-10-14

• Plans to cancel the increase in corporation tax were reversed, reinstating the original plan for the increase. (Source: Wikipedia)

  2022-10-14

• Discussion of aggressive tariff policies against China during the hypothetical 'First 100 Days of Trump 2.0' noted to elicit a significant market reaction, impacting supply chains and leading to a decline in ocean freight. (Source: Related Document)

  Ongoing (Trump 2.0 discussion)

September 2022 United Kingdom mini-budget

On 23 September 2022, the Chancellor of the Exchequer, Kwasi Kwarteng, delivered a Ministerial Statement entitled "The Growth Plan" to the House of Commons. Widely referred to in the media as a mini-budget (it not being an official budget statement), it contained a set of economic policies and tax cuts such as bringing forward the planned 1% cut in the basic rate of income tax to 19%; abolishing the highest (45%) rate of income tax in England, Wales and Northern Ireland; reversing a plan announced in March 2021 to increase corporation tax from 19% to 25% from April 2023; reversing the April 2022 increase in National Insurance; and cancelling the proposed Health and Social Care Levy. Following widespread negative response to the mini-budget, the planned abolition of the 45% tax rate was reversed 10 days later, while plans to cancel the increase in corporation tax were reversed 21 days later. The mini-budget was among the first measures of the Truss ministry, which had begun on 6 September. The statement was delivered against the backdrop of a cost-of-living crisis and was immediately followed by a sharp fall in the value of the pound sterling against the US dollar as world markets reacted negatively to the increased borrowing required. They also appeared to be concerned that no independent forecast by the Office for Budget Responsibility (OBR) had been published. By the next day of trading, the pound had hit an all-time low against the US dollar. The mini-budget drew widespread criticism from economists, some of whom feared that its reliance on increased government borrowing to pay for the largest tax cuts in 50 years could lead to a situation similar to the 1976 sterling crisis when the UK was forced to ask the International Monetary Fund (IMF) for a financial bailout. The IMF took the unusual step of issuing an openly critical response to the budget, saying it would "likely increase inequality". It urged the UK government to "re-evaluate" the proposed tax cuts. HM Treasury announced plans to outline in November how the proposals would be costed, this being later brought forward to 31 October, alongside an independent forecast from the OBR. Despite continued market turbulence, and calls from Members of Parliament including members of the Conservative Party for a policy reversal, Prime Minister Liz Truss and Kwarteng maintained that the proposals outlined in the mini-budget would go ahead. Speculation began to mount about Truss's future as prime minister, and on 14 October she summoned Kwarteng back to the UK from a meeting of finance ministers in Washington, D.C., and asked for his resignation. Truss then appointed Jeremy Hunt to replace him. Hunt subsequently reversed the majority of the tax cuts that had been outlined in the mini-budget, a decision that led to a positive market reaction. Following Truss's resignation on 25 October, her successor Rishi Sunak retained Hunt as Chancellor. The 31 October statement was moved to 17 November in order to base it on the "most accurate possible" economic forecasts, and was also upgraded to a full autumn statement. Initial reaction to the mini-budget was mixed. The Daily Mail called it a "true Tory budget", while Frances O'Grady, the General Secretary of the Trades Union Congress, branded it "Robin Hood in reverse". Faisal Islam, the BBC's economics editor, described the mini-budget's reversal as "the biggest U-turn in British economic history". William Keegan, the former economics editor of The Observer, wrote that the plans outlined in the statement had shown a misunderstanding of Thatcherism and its attitude towards taxation.

Web Search Results

• Market Reaction - an overview | ScienceDirect Topics

  Market reaction refers to the response of the market to firm commitment offerings by companies, where the market either negatively discounts the price of shares or positively reacts to equity private placements , as observed in various studies conducted in the U.S.

• Market trend - Wikipedia

  Market sentiment ---------------- [edit] Market sentiment is a contrarian stock market indicator. When an extremely high proportion of investors express a bearish (negative) sentiment, some analysts consider it to be a strong signal that a market bottom may be near.( Hirshleifer observes a trend phenomenon that follows a path starting with under-reaction and culminating in overreaction by investors and traders. Indicators that measure investor sentiment may include:_[citation needed_] [...] "According to standard theory, a decrease in price typically leads to less supply and more demand, while an increase in price has the opposite effect. While this principle holds true for many assets, it often operates in reverse for stocks due to the common mistake made by investors—buying high in a state of euphoria and selling low in a state of fear or panic, driven by the herding instinct. In cases where an increase in price leads to an increase in demand, or a decrease in price leads to an [...] A market trend is a perceived tendency of the financial markets to move in a particular direction over time.( Analysts classify these trends as _secular_ for long time-frames, _primary_ for medium time-frames, and _secondary_ for short time-frames.( Traders attempt to identify market trends using technical analysis, a framework which characterizes market trends as predictable price tendencies within the market when price reaches support and resistance levels, varying over time.

• Market Correction: What Does It Mean? - Charles Schwab

  $0 online equity trade commissions + Satisfaction Guarantee. See our pricing More choices. More ways to invest how you want. Explore ways to invest Market Correction: What Does It Mean? A volatile mix of concerns over tariffs, inflation, and economic growth, as well as uncertainty about the future direction of government policy, pushed several major U.S. stock indexes into correction territory in mid-March—meaning they had fallen more than 10% from a recent high. [...] All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. Investing involves risk, including loss of principal. [...] There's no universally accepted definition of a correction, but most people consider a correction to have occurred when a major stock index, such as the S&P 500® Index or Dow Jones Industrial Average, declines by more than 10% (but less than 20%—that would be a bear market, but more on that below) from its most recent peak. It's called a correction because historically the drop often "corrects" and returns prices to their longer-term trend. Do corrections mark the start of a bear market?

• Schwab's Market Open Update

  All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc. [...] The U.S. Dollar Index ($DXY) remains near recent three-year lows. "Expectations for slower growth, lower inflation, lower forward rates, and shifting preferences for non-U.S. investment are driving the dollar lower," said Schwab's Jones. "A lower dollar adds to inflation pressure." As of early Wednesday, odds of a July rate cut were 25%, according to the CME FedWatch Tool, up from 20% yesterday after the ADP jobs data. The likelihood of at least one rate cut by September was 98%. [...] The U.S. Dollar Index ($DXY) remains near recent three-year lows. "Expectations for slower growth, lower inflation, lower forward rates, and shifting preferences for non-U.S. investment are driving the dollar lower," said Schwab's Jones. "A lower dollar adds to inflation pressure." As of early Wednesday, odds of a July rate cut were 25%, according to the CME FedWatch Tool, up from 20% yesterday after the ADP jobs data. The likelihood of at least one rate cut by September was 98%.

• Weekly market commentary | BlackRock Investment Institute

  U.S. stocks edged up to fresh record highs, with the AI theme taking the lead again. The S&P 500 more than fully recovered from its nearly 15% slide after the April 2 U.S. reciprocal tariffs announcement to end up about 11% in Q2 and up 26% from April lows. U.S. 10-year yields edged up to 4.35% after payrolls increased 147,000 in June, beating expectations. We think that highlights how job creation and wage growth would need to slow much more for inflation to settle at the Fed’s 2% target. [...] and/or strategy.In Singapore, this is issued by BlackRock (Singapore) Limited (Co. registration no.200010143N). This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. In Hong Kong, this material is issued by BlackRock Asset Management North Asia Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.In South Korea, this material is for distribution to the Qualified Professional Investors (as defined in the Financial [...] countries: this is Issued by BlackRock Investment Management (UK) Limited,authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000.Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock. In the European Economic Area (EEA): this is Issued by