The collapse in global equity markets continued. The FED’s statement on Wednesday to scale down economic stimulus and terminate the bond-buying program in 2014 has created panic and fear. The fear index reached the peak for the year. In New York, stock exchanges tumbled. The last two months profits were wiped out in two sessions. Dow Jones fell 2.34 % to 14.758 after the European markets were hard hit earlier in the day. In Asia, markets continued to fall dramatically.
Precious metals and developing countries’ currencies were particulalry hard hit. Gold prices fell more than 100 Dollars, and reached levels unseen in years. Silver was even harder hit and fell 10% in two days, trading below USD 20 an ounce. Oil prices quoted in USD fell 2.7 %, partly as a result of a stronger Dollar. Brent crude fell four Dollars, and traded at USD 102 a barrel. Other commodities such as copper, were driven further down.
The FED’s program of bond-buying has fueled stock market gains since last autumn, creating a strong rally taking indexes to new all-time highs. Investors have, for months, been buying on market dips, and limited stocks declined. It is a big question whether this pattern will continue. The money now leaving the equity market seems to have created a convinction that the past months rally was artificially created, mainly by the FED.
China’s higher funding Inter bank costs are adding to market tensions. Chinese stocks dropped 2.8 %. An eventual end to the super-easy U.S. monetary policy hasraised concerns that a higher U.S. interest rate will prompt a mass migration out of emerging markets. The Dollar has weakened somewhat against a basket of currencies after its big gains on Thursday. The EUR/USD traded at 1.3229 and USD/JPY at 97.66.
Precious metals and developing countries’ currencies were particulalry hard hit. Gold prices fell more than 100 Dollars, and reached levels unseen in years. Silver was even harder hit and fell 10% in two days, trading below USD 20 an ounce. Oil prices quoted in USD fell 2.7 %, partly as a result of a stronger Dollar. Brent crude fell four Dollars, and traded at USD 102 a barrel. Other commodities such as copper, were driven further down.
The FED’s program of bond-buying has fueled stock market gains since last autumn, creating a strong rally taking indexes to new all-time highs. Investors have, for months, been buying on market dips, and limited stocks declined. It is a big question whether this pattern will continue. The money now leaving the equity market seems to have created a convinction that the past months rally was artificially created, mainly by the FED.
China’s higher funding Inter bank costs are adding to market tensions. Chinese stocks dropped 2.8 %. An eventual end to the super-easy U.S. monetary policy hasraised concerns that a higher U.S. interest rate will prompt a mass migration out of emerging markets. The Dollar has weakened somewhat against a basket of currencies after its big gains on Thursday. The EUR/USD traded at 1.3229 and USD/JPY at 97.66.
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