World Markets Quickly Shaken Off The Positive
FxPro Financial Services Ltd | Oct 23, 2018 04:15AM ET
Alertness quickly returned to the world markets. American stocks failed to support the positive sentiment of Asian markets overnight. As a result, S&P 500 lost 0.4%. At Asian session, the futures for this index has lost another 0.8% this morning, returning to the area of monthly lows and decreasing for the fifth trading session in a row.
The American exchanges are concerned about the prospects of companies' incomes. A strong start of a reporting season was not supported, and companies are demonstrating a slowdown in growth, causing questions about their prospects.
Increased pressure on the equity markets supports the demand for the dollar as a defensive asset. In addition, the Japanese yen also turned to growth, reflecting the investors’ withdrawal from risky assets in Asia.
Chinese bourses played almost all the yesterday’s growth, losing more than 3%. South Korean KOSPI and Japanese Nikkei have decreased by more than 2.5%.
In addition, Europe's attention to the markets is shifting to the ECB's possible response to the rise in interest rates in Italy's debt market. Market participants try to assess whether it will be a chance for the Italian Mario Draghi to reconsider the plans of the monetary policy. A softer tone can increase the pressure on a single currency but may maintain the sentiment on the stock and debt markets of the region.
Brussels takes a firm stand, calling for compliance by all EU members, as the easing for Italy will quickly cause similar demands from other countries, such as Spain and Portugal. The consequences for the euro of the budgetary problems of Greece and its increased public debt are still fresh in the memory of market participants. Considering the size of Italy (the 3rd eurozone economy) and its debt (more than 2 trillion), even a less profound economic downturn can undermine the growth of the entire region.
The growth of geopolitical tensions and the budgetary problems of Italy will probably strengthen the thrust into protective assets, including the dollar and the yen, and will continue to press on the stock indices. The EUR/USD pair in August received support on the approach to 1.1300. In case of development of the pressure on the euro, this level is again in the sight of speculators against 1.1450 by the time of writing.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.