As the year closes, only gold remains a safe asset as equities get squeezed out
It definitely has not been a merry Christmas for global stock markets, leading to calls from bruised investors if it was time to bid adieu to their exposure to this asset class.
Yesterday, following a huge decline in the US markets overnight, Japan’s Nikkei index toppled by as much as 6 per cent in trading volumes.
$50.47 per barrel, down 6% per barrel for Brent, the global benchmark
“The markets are getting pummelled from every direction today,” said Stephen Innes, head of trading at Onada. “Markets are getting very worried about both China and EU economies, but now they are starting to factor in a possible US slowdown. Equity markets are in a world of hurt.”
The global equity markets were said to have lost $17 trillion in value until last week, and this one has been in the making for long. “The latest leg of selling has been quite brutal for investors who weren’t braced for it, mostly caused by Trump’s tweets on the Fed — it’s a kind of self-fulfilling prophecy,” Phaneendar Bhavaraju, Managing Partner and Head Global Market Strategy at Arrow Capital DIFC, said.
21792.20 Dow Jones Industrial Average, down by 2.91%
US president Donald Trump has been accusing the Fed of playing spoilsport by raising interest rates, which may hurt economic growth. On Monday, Trump tweeted: “The only problem our economy has is the Fed.”
This raised expectations that Trump may soon fire Powell despite assurances from the treasury secretary.
There are signs of capitulation as 73 per cent of SPX 500 financial stocks hit 52-week lows on December 24. So battered investors should think twice if they are planning to take the exit route. – Vijay Valecha Century Financial
“Mnuchin’s ‘Plunge Protection Team’ does not exactly exude confidence as investors grow more concerned that issues are even deeper rooted than feared and the plunge in the stock markets could affect global financial institutions,” said Innes. “Much fear mongering is going on.
“Honestly, after another bloodbath in Tokyo today, I’m very sceptical that markets will be able to stabilise before year-end.”
$1272.50 an ounce for gold, up by 1.14%, highest in six months
Oil also leaked by more than 6 per cent. Brent crude traded 6.23 per cent lower at $50.73 per barrel. Gold, which is the natural safe haven for investors, extended gains after hitting its highest level in six months. It was up 1.14 per cent at $1,272.50 an ounce.
Source: Gulf News Business