Financial market research and analysis

Wall Street just can’t shake off the dark cloud that is hanging over it. Doom and gloom continued for another session overnight which saw Wall Street gains for the year wiped out. The Dow dived over 500 points, adding to losses of 400 points from Monday’s session. The S&P is down almost 10% from its record high as it flirts with correction territory. The tech-focused Nasdaq dived 1.7% overnight driven by a 5% decline in Apple.

Asian markets were broadly lower, although managed to pick themselves up off the lows at the time of writing. European bourses were also pointing to a slight recovery when trading begins on Wednesday. Interestingly, despite the heavy sell-off in the US, investors haven’t been in the search of safe havens. The dollar moved higher versus the yen both in the previous session and as trading started on Wednesday.

Slower growth expected

That said, the markets have been and continue to be exceptionally jittery. Heavy losses are being sparked by a range of concerns including everything from the US-Sino trade tensions, the Fed hiking interest rates too quickly, haemorrhaging oil prices and a sell-off in tech stocks to name just a few. Caught amongst all these fears is the bottom line that investors are bracing themselves for a significant slowdown in economic and corporate growth. Whilst the economy is still doing well right now, particularly in the US, the phenomenal corporate results of previous years are expected to slow considerably. We are already starting to see signs of this with Apple and it’s iPhone numbers.  Investors are expecting trade tariffs, higher borrowing costs and the reduced impact of Trump’s tax cuts to spark a significant and noticeable deceleration of the economy in 2019. We are also expecting a slowdown in China, which inevitably will hit demand for metals and oil.

Oil moves 1.3% higher

The price of oil was stabilising after tumbling below $53 for the first time in over a year. Oil futures in both London and New York dived 7% following a report that US crude inventories climbed for a ninth straight week. The high inventory levels come at a time when concerns are growing over slowing global growth and therefore slowing global demand. Oil is a volatile commodity to start with, but adding into the mix extreme economic policies, such as sanctions, and the increasing pressure of geopolitics on the black stuff is bringing about unprecedented levels of volatility. Oil is down almost 30% since its October highs. As such, commodity currencies such as the Canadian dollar have struggled in the face of tumbling oil prices.