Bull Market takes A Dive
A dive? More like a hammering. The return of trade war tensions brought with it a nasty selling frenzy that left most major indexes deep in the red yesterday. Round two, here we go!
Global equities plummeted across the board yesterday with the S&P 500, Stoxx Europe, Emerging markets and Asia-Pacific falling 1.7%, 1.4%, 0.8% and 0.3% respectively. A 9.89% rise in volatility sparked a flight to safety from perceivably riskier assets into relative safe havens, such as gold, which has appreciated 0.5% since the start of the week.
The fallout from the resurgence of the trade war has already erased $1.36 trillion from the global stock market in a matter of days and brought volatility back from near historic lows. Yesterday’s rout was the largest since early March, but is it enough to derail the bull market?
Well, that depends on how the next few days go. With the Friday deadline looming, both US and Chinese negotiators will have to work through the night to avoid a serious escalation and the injection of more uncertainty into global markets. However, a resolution before Friday is looking unlikely.
Equity markets have run exceptionally hard since the start of the year, and may have a correction in store if US-China relations dissolve back into a tit-for-tat tariff spat. Asian shares opened lower this morning, while Europe looked tentatively stable, but analysts are predicting another potential day in the red for US markets.
Buckle up, people, this could get messy.
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