Australian Markets Impacted By Global Sell Off: Should You Worry?

  • Oct 11, 2018 AEDT
  • Team Kalkine
Australian Markets Impacted By Global Sell Off: Should You Worry?

The global tensions have been on the rise and thus, they are significantly impacting the equity markets and are weighing on the sentiments of the investors. After the entry of Chinese markets this week, the trade worries have renewed again leading to significant outflows from the markets. Not only this, there are other macro factors which are impacting the markets. It seems like the global markets are still not done with the news of the higher treasury yields. The markets are still reacting negatively on the news of higher yields. If you consider these events as minor events, the report from the International Monetary Fund or IMF is something which you can’t afford to ignore. The fund’s report further accelerated the downward momentum as they stated that the global economy is exposed to significant risks because of the ongoing trade wars between the US and China. 

Considering the present scenario, the markets are highly risky and any position that needs to be executed has to be done with utmost care. The primary drivers for the volatility in the markets globally are escalated trade worries as well as the selling momentum in the treasuries. On October 10, 2018, the downward trend was also visible in the US markets. Dow Jones Industrial Average or DJIA ended the session lower at 25,598.74 which implies an intraday decline of 831.83 points or 3.15% while S&P 500 ended at 2,785.68 reflecting the fall of 94.66 points or 3.29%. The strong downward momentum in the technology stocks was witnessed primarily because the heavy weight stocks tumbled. Amazon (NASDAQ: AMZN) and Facebook (NASDAQ: FB) ended the session lower by falling 6.15% and 4.13%, respectively.

Amidst the strong downturn in the global economies, let’s not forget about the emerging economies. The dark clouds are also hovering over the emerging markets primarily because of the appreciation of the US dollar. India has been severely impacted by the global sell offs with markets witnessing a strong downtrend. The depreciation of the Indian rupee and the fears regarding the current account deficit are still impacting the Indian markets as well as economy as a whole. As per the treasurer of Australia, the trade concerns between US and China need to be seriously taken and measures need to be adopted which could help in controlling these disputes. The Australian economy might also get hurt if the trade tensions get escalated further as per the International Monetary Fund. As a result, the fund has downgraded the economic growth of the Australia and also stated that the trade wars risk would also be felt by the economies globally.

The higher interest rates are creating the downturn in the global economies. The statement of Federal Reserve which reflected that the US economy is expected to witness robust growth has further raised the hopes of further rate hikes by the apex bank of the US. As a result, the broader views indicate for expecting that the American economy might witness another hike when the Fed meets in December 2018.

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