UNITED STATES, WASHINGTON (OBSERVATORY) — With his remarks, the American president almost every day tries to influence the dynamics of the markets. This takes traders by surprise, and they consider today’s times to be almost the worst.
Donald Trump is trying to win the trade war, so do not tell him about the 600 points of the Dow Jones Industrial Average. But traders trying to cope with the impact of his statements on quotes want to talk only about this.
Days like Friday cause stress in the markets. A decade ago, Max Hochman, then 24 years old, was at the epicenter of the storm, buying and selling toxic loan contracts in the hedge fund he founded. Now, heading the asset allocation business at Pacific Life Fund Advisors, he says that the unpredictability he currently faces daily is incomparably higher, Bloomberg writes.
“I said that the trade in credit derivatives until the end of 2008 was crazy, but now it’s still weirder,” says Gohman. Then it was difficult to open and close positions because of liquidity, and “now each market segment has its own specific factors, and there is Trump at the head, who can wreak havoc in truly inventive ways that no one thought about,” he said.
Although the stakes were more serious at the time of the financial crisis (economies were on the verge of depression and unemployment rose sharply), for investors, trading was mostly unidirectional.
Now the sheer number of changing elements is creating unique challenges, says Hohman: Federal Reserve signals cause momentary fluctuations in bank stocks, bond yields and exchange rates, and the reporting season promotes stock movements such as Target Corp. and Macy’s Inc., up and down 10% or 20% per day.
Perhaps everything would have been fine if it hadn’t been for the president, whose unexpected comments on Twitter have become increasingly difficult to at least somehow win back investors in the summer season. August is often a difficult month for traders, but in the current S&P 500 index has already fluctuated in the range of at least 1% following nine of 17 trading sessions, which has become the maximum volatility since the sale of shares in December.
At the beginning of the new week, no signs of turbulence decay were observed: futures on the S&P 500 and Nasdaq 100 fell after the opening of trading. Sunday was least like a day off for Donald Selkin, chief market strategist at Newbridge Securities Corp.
“I have been waiting all day. Such things can be foreseen. There was a feeling that quotes would go down due to the announcement of a new increase in duties,” he said. “Throughout the weekend you understood that they will go lower – the question is how much.”
On Monday, US stock futures came in positive after Trump said on the sidelines of the G-7 summit that China had requested a resumption of trade negotiations. A few hours earlier, the main negotiator in China publicly called for calm after mutual threats to raise duties.
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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