Fears of U.S. policy for violent stock market turmoil

On a day of low values, the next maximum falling prices, then again. This image show in the Christmas week, the equity markets. In the case of closed stock markets in Europe, the U.S. exchanges made yet on Wednesday a course of fire, as it was not to be seen since 2009. The Dow Jones rose to 1086 points, the highest score in its history. Both this Index and the S&P 500 rose by 5 percent. The Index of technology exchange Nasdaq-100 has increased by 6.2 percent.

year low in Switzerland

On the Swiss stock exchange, which was opened in the current week for the first Time yesterday, walked past the euphoria completely. After a positive Start, the courses turned in the course of a day, becoming stronger in the red zone. At the close of trading the leading stock exchange SMI index was 2.6 per cent in the negative and reached with 8196 points, the lowest level of the year. Also in the U.S., equity markets traded already after opening in negative territory. The same image was displayed on the major trading venues in Europe.

the records in the United States to be Qualified from the Wednesday through the development on Monday. Then, there was also a record – only in the other direction: The Dow Jones Index fell by 653 points, and as yet no Christmas eve.

As the most important trigger for the stock market turbulence in the Christmas week, experts from the communications of the U.S. government. Thus, high-ranking officials have not explained at the weekend, President Trump have in mind, to fire the from used Central Bank chief Jerome Powell. This has fuelled corresponding Fears. The Central Bank is to Decide in your of the policy regardless. However, Trump has criticized the interest rate increases by the Fed are already working hard. That the chief could be dismissed by the President, was previously in the USA as out of the question.

trading over the holidays is to thin

Lower interest rates, the stock fuel, although courses, but if the investors have to fear that an Institution such as the Central Bank may also come under trump's control, fuelling the high level of uncertainty. The policy of the President appears more and more unpredictable. It's fitting that trump's Minister of Finance, Steven Mnuchin was also announced at the weekend that the big U.S. banks are not currently at risk of failure. He had, after consultation with the heads of assure. This reassurance has also triggered a big confusion, because there were no signs of Worry.

a strain came about that the US government lock, again a budget (Government Shutdown) is subject to, because Trump could not agree with the Congress on a state budget. The President wants to take substantial resources for the construction of a border wall with Mexico in the Budget, which the opposition Democrats withhold their consent.

According to market observers, the violent price swings this week a number of causes. For one, the trading is thin, as always over the holidays. This means that there are significantly fewer investors than is usual in the trade involved. The alone stronger rashes. On Wednesday, investors who bet on falling prices and, therefore, borrowed the shares sold had to in addition, these titles will buy back to limit their losses (this is called a "Short Squeeze"). These covering purchases drove the price higher.

important is also that the share trade is conducted, 85 per cent of so-called Algorithms, i.e., programs that respond to predetermined trends with sales or purchases. Thus, the above-mentioned covering purchases are triggered by the "Short Squeeze", as well as sales order, if the prices fall below predetermined threshold values. The reinforced any existing price trend.

the shadow of trade war

The rashes for a long been significantly increase in the nervousness in the stock markets around the world. In the year 2018, the investors have lost as measured by the major stock indices money everywhere. The nervousness was also reflected in the so-called implied volatilities. The the from option prices calculated expected fluctuations in the rates are. In the USA you are (as measured by the VIX Index) at such a high level since 2011. Significantly increased recently also in Switzerland.

the reason for the nervousness are on the one hand, weaker growth prospects for the real economy. To do this, risks in connection with the trade war between the US and China, with the Brexit, and with geopolitical tensions. They all have the potential to be a global economic crisis to trigger. The unrest on the stock markets is therefore not only a cause for concern for the investors, it suggests that the dangers would all meet.

(editing Tamedia)

Created: 27.12.2018, 21:44 Uhr