Wakey Wakey!!
Markets have kicked into life today, with US equity indices tumbling from their elevated perch. Falling by approximately 2% across the board, the sell off across the Atlantic has left a risk-off feel within markets, with investors flocking to safety. From the two graphs below, investors’ concerns can be clearly seen. The first graph shows both the NASDAQ Composite Index (Blue) and the NYSE Composite Index (Orange) in relative freefall, shedding hundreds of billions of Dollars from the value of US companies. In the second chart, the value of Gold, a traditional safehaven immune from the swings of more volatile and risky assets, can be seen to rise by 0.5% as rising demand unbalanced yesterday’s value.
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The rally in safehavens and the selling of more risky assets, including emerging market currencies, has been precipitated by concerns that the trade war between the US and China, the effect of which had started to be priced out, may be reigniting. With the arrest of the Chief Financial Officer of one of China’s largest companies with a market cap larger than that of Apple and with considerable reach within the United States of America, there have been market-wide fears that the ceasefire between the two trading leviathans could be called off and tariffs ramped up once again. Within the Pound, developments in Westminster continue to cause disturbances. The Pound has received a bid today as the possibility of a no-deal Brexit seems increasingly unlikely. Whilst a second referendum would also contribute to political uncertainty, the increasing improbability of Carney’s chaotic no-deal scenario continues to support the Pound.
Today’s Global Market:
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Discussion and Analysis by Charles Porter
A revised 2024 The Dollar opens stronger this morning following the Federal Reserve’s decision last night. The decision confirmed interest rates were to stay on hold following this meeting. As we have highlighted following previous decisions, the forward guidance offered by the Chair Jay Powell was once again underwhelming. However, the Dollar’s bid this morning […]
OECD Those fun loving folk at the Organisation for Economic and Cultural Development are at it again by forecasting that the UK will in 2023 stand at the very top of the G7 for….our rate of inflation at 7.2% which is a great deal more than the promised rate by the UK Government for the […]
GBP While the Bank of England’s decision to pause on raising rates by the narrowest of margins with voting 5-4, that resulted in GBP being sold sharply which reflects the market’s view that while inflation at 6.7% looked better than expected yesterday, the effect of higher oil prices and petrol and diesel at the pumps […]