It has been one of the toughest years in half a century for financial markets yet and it got even worse on Tuesday. Assets are clearly simmering with weakness and have left the investors with nowhere to hide.
This is the second day when the stocks buckled up and the S&P 500 went towards correction. The credit markets also showed signs of falling apart. Bitcoin is also in free fall, while Treasuries, the yen, gold and other traditional havens stood still.
The markets have seen one of the worst single session losses after 2015 with 2% plunge in equities, the downdraft in corporate bonds and oil dropped by 6%. Instinet LLC’s trading head in New York, Larry Weiss, said,
While there’s still no ‘panic in the streets,’ most traders are unconvinced that the selling will slow down anytime soon. The flight to quality is now a flight to cash. It’s tough to convince anyone that now is the time to put money to work.
Even the harmonizing losses are dreadful for future. The corporate earnings are at a peak and have fueled the longest bull market in US stocks. The markets have been giving grim messages and there is no sign of easing back of interest rate hikes by Jay Powell’s Federal Reserve which is a reason of worry for the corporate bond holders sold by S&P 500 companies and are worth $5 trillion.
Unwinding signs have multiplied and hedge funds have also turned net sellers again and they are among the most selling among major industries as reported by Goldman Sachs’ client data. Meanwhile, bearish bets are made against electronic equipment makers and Internet software developers.
KeyBank’s chief investment strategist, Bruce McCain said that the investors are waiting for the right opportunity. There is no shortage of money, but not enough opportunities are available.
Source: MSN, Bloomberg