ZFX: Fears arise! Risk aversion dominates these day
Stock markets among Asia-Pacific generally slipped on Thursday following an overnight plummet of Wall Street. The three major indexes all fell by more than 3%, of which the Dow fell more than 900 points, a drop of the fourth consecutive trading day, to its lowest level since the late July. While the Dow was approaching almost a three-months low, the S&P 500 and Nasdaq also saw the lowest this month.
Investors are monitoring the US election and the increase in coronavirus cases over the West countries. Those uncertainties and fears are weighing on investor sentiment all over the world. However, looking back to the US futures bouncing a bit from the recent low, Asian stocks edged lower when closing.
The greenback served as the safe-haven again due to the concerns of further lockdown in Europe, damaging the economic recovery. But, the Euro and Sterling weren’t that bad, comparing with the Aussie, the “riskier” commodity currency, dropping over 1% on Wednesday.
Besides the second wave of coronavirus pandemic, most of the commentaries believe that the big drop was triggered by the fail talks of the relief bill in the US. The Democrats and Republicans cannot reach an agreement over such a huge economic stimulus package before the US election, boosting risk aversion over these days.
Another focus of course is the election next week with an unclear situation. The recent scandals involving Biden and his son are spreading out continually which are already affected the support of the “Blue” shown in the polls. A report said that the search volume for "Can I Change My Vote?" on Google has soared over these day, which is interpreted as an unfavorable sign for Biden's election. This has caused the investment market to reassess the election, and price in the uncertainty.
ZFX analyst Jacob Leung said that, the market may be reacting on Trump's win. The first thing we can expect is that the China-US tensions may be rapidly escalated next year, no matter in economic, political, military and technological aspects.
Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations carried out in accordance with this article. Please be firm in your thinking and do the corresponding risk control.