US: Slump in equities continues – Danske Bank

Analysts at Danske Bank point out that the sell-off in global equities continued last night and all the major indices in the US ended the day with sizeable losses.

Key Quotes

“The slump in US equities is now the biggest under Trump's presidency. Volumes continue to be very high and the VIX index surged further to a level not seen since February when we had the last stock rout. The verdict is still out as to why global equity markets are under pressure.”

“Eequities face a wave of negative factors at the moment. Global trade jitters continue, Italy continues to spook investors and the Fed seems inclined or forced to hike as the labour market continues to tighten. Furthermore, US treasury yields are being pushed higher by weak international demand due to the expensive FX hedge and supply is booming and will continue to do so as the growing US budget deficit needs to be funded.”

“One of the factors that can probably stabilise risk markets is a setback or at least a stabilisation in US longer yields.”