By Joyce Yu
Philadelphia, PA–Casino stocks tumbled on Friday after a Bloomberg report that China could soon allow some forms of gambling in the southern province of Hainan. But the report is likely inaccurate which have already been denied by the local Chinese government previously.
Quoting people familiar with the talks, the Bloomberg report said China is drafting a proposal to allow gambling on Hainan Island. The proposal, which is part of a wider plan that includes relaxing visa rules and building a new airport, is still in an early stage, and “could open the door to physical casinos over the long term.” This is likely a reproduction of old news which proved to be inaccurate. With no mention of any gambling business, the Chinese government unveiled measures in 2010 to build South China’s Hainan Province into a top international tourism destination by introducing international sports and entertainment activities and exploring ways to promote local lottery and gaming industries.
Most stocks fell on Friday as volatility crept back into the markets after a period of steady gains. Most European and most Asian markets fell and world stocks are set to post their biggest weekly drop since late 2016.
Official data showed the U.S. economy added 200,000 jobs in January, and unemployment rate remained at 4.1%, the lowest in 17 years. Wages grew 2.9% compared with a year earlier, better than expected. With impressive economic data and buoyant oil prices driving up long-term inflation expectations, expectations of higher inflation continue to boost borrowing costs globally, a move that sparked a sell-off in shares.
“If you look at a variety of indicators, it looks like we have swung to levels of extreme bullishness. We have seen substantial inflows,” Paul ‘O Connor, head of UK-based Janus Henderson’s multi-asset team told Reuters. “We have seen consensus crowding into the long equity trade so actually we have begun to fade the move and take some equity risk off in the last few weeks.”
Investors also become more anxious about the sustainability of global equity bull run. Bank of America Merrill-Lynch’s indicator of market sentiment hit a “sell” signal pointing to a downturn for risk assets. “The reaction in the bond market is due to the rise in average hourly earnings,” said James Ragan, director of individual investor group research at D.A. Davidson. “I think the market is now thinking of the possibility that the Fed could raise rates four times this year rather than three.”