US market volatility low Walt Disney in focus

There is a distinct lack of volatility in the markets as trading kicks off mid-week in the US; both the S&P and the Dow Jones are seen moving lower by 0.2%, one of the largest moves in the S&P for many sessions.

Volatility at multi-year low

Interesting the VIX index which measures the level of volatility in the market has been steadily moving lower since the beginning of the year and volatility is now at the lowest level it has been since 2014. This is the opposite to what we would have expected to see with Trump taking the reins; the expectation was that Trump would send volatility off the scale – this just hasn’t happened. One reason we haven’t seen the type of volatility we were expecting is the detail is not coming through in Trump’s 2am tweets. In the near term the lack of volatility is expected to continue but down the line when more detail feeds through regarding policies, taxes and deregulation there will be the potential for more exaggerated moves.

Energy sector lower ahead of inventory data

The energy sector is posting the largest losses as crude oil continues to sell off ahead of the EPI inventory data due in the next hour. Crude inventory data in the previous session showed that US shale producers have been quietly ramping up output to levels not seen since 1970, changing the supply demand dynamic and in doing so pulling crude lower.

Media stocks are one of the few areas offering support as investors digest mixed earnings from Walt Disney and a beat on estimates from Time Warner.

Walt Disney rallies on news CEO could stay

Walt Disney posted results after the bell yesterday and although it beat forecasts on profits, earnings came in weaker than expected. Delving deeper into the figures weakness in earnings stemmed from ESPN and a serious decline in subscriber numbers, whilst strength came from parks and visitor centres and particularly from films which have consistently been an excellent profit generator. Looking ahead Disney has plans for several big films over the next few years so profit generation should remain strong. On release the initial (grey) market reaction was of disappointment, however on the news that CEO, Bob Iger, may stay past his contract end in 2018, shares rallied. Walt Disney opened up 2% in today’s session and is currently trading around levels not seen since 2015.