Global markets in panic mode
THE STOCK MARKET was in a state of panic yesterday as Dow Jones plummeted more than 700 points sparking a wave of investment into gold, bonds and currencies.
The Dow Jones Industrial Average plunged by more than 700 points as the US-China trade war intensified with China retaliating against USA President Donald Trump’s latest move. Gold prices jumped by more than one percent to hit their highest level in more than six years today, while the Japanese yen and core government bonds also increased. The news pushed the S&P 500 to its worst weekly performance of the year dropping 3.1 percent last week with the Dow seeing its second largest weekly fall of 2019 last week at 2.6 percent.
Global growth concerns have risen as the trade war between the world’s two biggest economies the US and China sparked a stampede into perceived “safe-haven” assets.
Gold prices soared by more than one percent hitting their highest level in more than six years.
The CBOE volatility index, known commonly as the VIX or Wall Street’s “fear gauge”, hit its highest level since mid-May, while Europe’s equivalent reached its highest point since early January.
At times of market volatility and turbulence, investors typically flock to assets which are expected to either retail or increase in value.
Dow Jones collapse: Dow Jones has plummeted amid US-China trade tensions.
Dow Jones collapse: The Dow Jones collapse of 2008 saw Dow Jones drop by more than 750 points
The Nasdaq Composite also lagged, falling by 3.4 percent meaning it is on track to fall for a sixth straight session, which would be its longest losing streak since late 2016.
The major indexes have also fallen more than 5 percent from their record highs set last month.
Trade bellwethers Caterpillar and Boeing dropped 3 percent and 2.3 percent, respectively, while semiconductor stocks like Micron Technology, Skyworks Solutions and Advanced Micro Devices fell by at least 4 percent.
In a research note from deVere Group international investment strategist Tom Elliott said: “Global stock markets have panicked.”