Markets Take a Sour Turn
That wasn’t in the script! Stocks got massacred yesterday as fearful investors painted the US stock exchanges red. The winners are the market players who lost the least money, weathering unwelcome events that have sent the financial world into a spiral. Don’t make any sudden movements!
August 5th was a record-breaking day, bringing the deepest downward plummet all year. It’s been thumping good 2019, but the Dow Jones was hammered yesterday in what could be the start of a sour turn. Britain’s FTSE 100 gave up billions in market value, as did Germany’s DAX and the Shanghai SSE index in China. There were no survivors, leaving investors to take stock of what they still had, and take shelter under the cover of safe havens like gold, treasury bonds, and cash.
The blame game has already started, too. It was chaos in the markets, but just a normal day at the office for world leaders. Most fingers are pointed at China, which picked yesterday to strike back against the White House with an unsurprising trade threat. An eye for an eye? Chinese President Xi has ordered a stop to American food orders and is weighing up fresh tariffs of his own. Those would counter Trump’s recent 10% taxes on all remaining Chinese goods. The two of them are warmongers of an economic kind, and it’s investors on the front line who are feeling the brunt.
So, now what? We still have a week of market action ahead of us and assuming the dust settles; a brave few might try to buy the dip. However, if conditions deteriorate any further, it will be Fed Chair Jerome Powell back in the spotlight. Another drop in interest rates could stem the bleeding, but recession fears could also be compounded by the move as the emotions of money start creeping into market sentiment. This could be the most important week of the year for investors, so pay attention!