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Stock Market Stopped at Dangerous Point
Written by: PaxForex analytics dept - Friday, 27 June 2014 0 comments
The leading stock indexes in Europe and the U.S. mostly slightly declined last Friday: Britain's FTSE-100 (-0.60%), German DAX (-0,50%), the French CAC (-0,58%), the U.S. Dow (+0,06%), S&P 500 (-0,03%), Nasdaq Composite (-0.01%). As a result, they lost during a fairly volatile week from 0.3 to1.3%.
The wave of fixing profits’ investors, which we saw last week, has put major stock indexes to the brink of collapse and was triggered by the publication of minutes of the last meeting of the U.S. Federal Reserve, from which it became clear that an increasing number of its leaders sees a need to reduce the amount of incentive programs in economics.
The Fed expressed concerns about the fact that a long period of low interest rates could undermine financial stability. With low interest rates investors are unsatisfied with low returns on their investments and can take on unnecessarily high risks in the pursuit of the higher level of profitability. This can make the financial system more vulnerable to shocks.
Last week was market by sharp rise of VIX index, which added up more than 12%. This index is also called a "fear barometer" of investors. It was the "alarm bell" for hedging their risks
investors about further possible adverse developments.
Futures on major U.S. stock indexes practically not changed for today. The stock markets in Asia have mixed dynamics. The most negative data shows Japanese Nikkei-225, which lost more than 2%.
The benchmark in Tokyo has been on a tear, rising 36 percent since the beginning of the year. The yen’s steady fall against other major currencies has been a major market propellant but it reversed some of that decline Monday after reaching 103 to the dollar last week.
The yen’s weakness has been a byproduct of the economic stimulus policies embraced this year by Prime Minister Shinzo Abe, who has embarked on an aggressive campaign to lift consumer prices and encourage borrowing and spending. As part of that effort, Japan’s central bank is flooding its financial system with money, helping reduce the value of the yen.
Today's opening of European stock markets was marked by a slight change in the leading indexes. Prices for Brent crude oil fell slightly today and fluctuate around $ 102.3 per barrel. Thus, the background and the influence of the main factors on the stock market remain mixed.
In formed conditions, analysts expect to see today, at the beginning of the day, slight changes of quotes from the spectrum of the most liquid securities in relation to the previous trading day.