STREET DOGS

If you’re not sure whether or not we’re still in a bull phase, or if you don’t believe that bull markets simply shrug off bad news, read on …

You might expect news of a mass shooting or terror attack to have a negative effect on markets, with heightened fears increasing volatility. A few weeks ago, for example, news of the terrorist attack in Barcelona that left a dozen people dead sent the US market tumbling on the day.

The Dow fell more than 274 points, about a 1.2% drop. All 30 of the stocks in the index were in the red. It was the biggest decline for the Dow since May. The S&P 500 fell 1.5% and the Nasdaq nearly 2%. The VIX, an index that measures volatility, surged more than 30%.

On Monday, however, following what is being called the deadliest shooting in US history, which has left at least 59 people dead so far and hundreds injured, US markets climbed to record highs.

The Dow Jones Industrial Average was up 0.68%, the S&P 500 added 0.39%, and the Nasdaq increased 0.32%. All three benchmark indices closed at record highs, the S&P 500 for its third day running and the Nasdaq its second. The VIX closed at 9.45 after opening at 9.98 and touching a low of 9.37 during the day.

This was despite tension between the US and North Korea ratcheting higher at the weekend as Donald Trump continued his war of words with Kim Jong-un on Twitter. In a series of posts on Sunday, Trump wrote that US Secretary of State Rex Tillerson was “wasting his time trying to negotiate” with Kim.

Then again, as some commentators are suggesting, the market’s upsurge in relative calm on Monday may be due to the release of the purchasing managers index for manufacturing, which increased to 53.1 against an expected 53.