What’s Causing the Wall Street and Global Market Sell-Off?

The global market sell-off continued over night with Wall Street, as well as other global markets slipping rapidly during an unstable period of trading.

Major US share indices were trading a little higher in the New York morning, but quickly faulted.

Dennis Dick, a propriety trader at Bright trading in Las Vegas spoke of the rally, telling Reuters:

We saw a rally this morning, and that ended up being a suckers’ rally.

Then you had buy-the-dippers coming in here saying this was too much, too fast.

Are we out of the woods here? I don’t think so, you’re going to see a lot of volatility in the next week or so.

This comes after concerns over rising interest rates and the looming trade war tipping boiling point, meaning many investors are backing away from risky investments.

The reasoning behind the market sell-off?

According to the ABC, China’s growth worries and the Federal Reserve’s continuous increase of interest rates have dominated the widespread cross off.

Simon Derrick, the chief currency strategist at the Bank of New York Mellon, said the US-China trade war, as well as Chinese efforts to stimulate their domestic economy while lowering the yuan in reply, has been a key driver for the declines seen in the market. Derrick stated:

Looking at the news headlines heading into the US open [on Wednesday] the main events had been warnings overnight from Treasury Secretary Mnuchin about CNY [yuan] devaluation and from the IMF about Chinese growth.

The previous 24 hours had also seen President Trump repeat his threat to place tariffs on an additional $US267 billion of Chinese imports.

In other words, the most likely cause for the sharp change of mood at the US open [on Wednesday] was concerns about Chinese growth rather than anything else.

If you want to protect your family’s wealth, you need to know why this financial expert is predicting economic collapse. Find out more here.

Trump has remarked that the rises were not necessary and the far too fast and rigid attempts to put pressure on the Federal Reserve to stop raising interest rates, did little to calm Wall Street.

The Fed is out of control… I think what they’re doing is wrong.’

The president’s top economic adviser, Larry Kudlow acknowledged this, but claimed the Fed was on target.

Mr Kudlow told CNBC that the rise in interest rates is ‘a sign of economic health that is something to be welcome and not feared’.

The President is not dictating policy to the Fed … They are independent. They are going to do what they are going to do,’ he added.

Market sell-off settles in Australia

Australia is a relatively small country, and sensitive to economic shifts from its bigger, stronger economies such as the US and China, which is why we are seeing these effects reflected in the ASX today and yesterday.

The Australian share market sunk lower this morning after news that ASX futures were down 47 points.

At the same time that stocks fell, investors were quick to take refuge in safe haven assets such as gold, which saw the precious metals price spike by 2.5% to US$1,222 per ounce.

Meanwhile, the value of the Australian dollar increased to 71.2 US cents.


Ryan Clarkson-Ledward,
Markets & Money

PS: Global markets are steeped in volatility, with market sell-offs, trade wars and general uncertainty — a global financial crisis could be around the corner and there’s some things you’ll need to know to survive it. Luckily, our Aussie economic expert Vern Gowdie’s free report: ‘Global financial crisis 2018’ tells you everything you need to know, here.

Ryan Clarkson-Ledward is a junior analyst for Markets & Money. Ryan has degrees in both communication and international business. His priority is bringing you the latest price updates on stocks through ASX updates, as well as supporting Sam Volkering with background research. As part of the team at Markets & Money his aim is to provide unbiased and relevant news for readers. Ryan’s work with Sam is designed to provide research that complements Sam’s analysis for small-cap and technology stocks. Together, their objective is to break through all the jargon and give you the hard facts to inform your investment decision-making. Ryan writes for:

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