Global markets resume sell-off
GOLD PRICE RISES AS INVESTORS SEEK REFUGE IN SAFE HAVEN, AMID MARKET JITTERS ACROSS EUROPE AND ASIA
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The Dow Jones Industrial Average tumbled 400 points at the opening yesterday, as traders took some risk off the table amid concerns that earnings from US companies may have peaked and geopolitical concerns over the murder of journalist Jamal Khashoggi.
The sell-off came on the top of declines that global markets saw last week even as treasuries witnessed offloading, with yields rising to multi-year highs as US president Donald Trump said the Fed was “going loco” with interest rate hikes.
Yesterday, the Dow Jones Industrial Average fell to a low of 24,870.22, before trading 1.13 per cent higher at 25,030.89.
“After a strong two-day rally, Chinese stocks fell back sharply overnight. As a result, the losses for European indices sharply increased at the open this morning while US index futures also fell across the board,” Fawad Razaqzada, a market analyst at Forex.com said.
Shanghai index lower
The S&P 500 index also traded lower, falling 1.43 per cent to 2,716.58. The Stoxx Europe 600 Index fell 1.34 per cent to 354.92. The Shanghai Composite Index closed 2.26 per cent lower at 2,594.83, snapping a two day gaining streak.
US indices, which have been registering losses for the past few sessions, have turned flat on a year-to-date basis.
The indices have been on a bull run since 2009, as relaxed money policies implemented by the US central bank inflated asset prices, and the positive momentum continued after the US president assumed office, amid tax cuts and a recovering US economy.
“With the various geopolitical risk factors bubbling 25,317.41 7,042.80 22,010.28 (close) Benchmark Sensex Abu Dhabi Dubai violently in the cauldron, all the ingredients for a marketshaking sell-off across global stocks seem to be in place. All good things must come to an end and this could be the story for the bullish global equity markets,” Lukman Otunuga, Research Analyst at FXTM said.
Meanwhile, the gold price rose as investors sought refuge 33,842.23 (close) 4,970.30 (close) 2,753.07 (close) in the safe haven. Treasury yields fell.
Gold for December delivery rose 1.1 per cent to reach $1,238.40 an ounce. The yellow metal has shed more than 6 per cent since January despite rising geopolitical risks and heightened trade conflicts.
“The yellow metal has scope to shine with intensity this week as the risk-off mood sends investors rushing to any form of safety,” Otunuga said.
“A solid breakout and daily close above the $1,233.50 resistance level is likely to inject gold bulls with enough inspiration to challenge $1,245,” Otunuga said.
“However, with the dollar also benefiting from safe-haven flows there could be fierce competition between the two.”
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