Wednesday's stock market massacre

Daily Analysis - 11/10/2018

Dow fell more than 800 points

Usually, when a stock market falls at such a quick pace investors look for safety in the more steady or safe heaven assets.

However, that's not the situation now, on Wednesday a sharp fall in stocks actually happened due to the fact that investors have continued selling longer-dated Treasuries. While Treasuries are sold, yields always move to the opposite price, and that pushes up interest rates for a full range of consumer and business loans. Peter Boockvar, chief investment officer at Bleakley Advisory Group said

"There's no flight to safety in bonds. That's a sea change."

Many Analysts state that the volatile character that the market develop the past few months could be translated as a warning sign that probably there will be further stock market failing ahead, or till investors start to panic and jump back into Treasuries.

The S&P 500 dropped further than 3.3% and close at 2,785 and the Dow fell 831 points.

Almost $13B washed off of from cryptocurrency markets

On Thursday the price of the main cryptocurrencies fell nearly $13 billion of value and being washed out in less than 4 hours. The popular cryptocurrency bitcoin fell approximately 5% to $6,302, as XRP and ETH both of them lost over 10%, according to data from Coinmarketcap.com. It is very unusual because we didn't use to actually see bitcoin drive other digital tokens deeper. In just less than 4-hours, almost $13 billion of value washed out from the whole cryptocurrency market.

The fall occurs with new warnings from financial authorizations about the fast increase of digital coins and the potential threat to the economy.

Gold prices still weak

On Thursday Gold prices went down as strong U.S. data probably supported the possibilities for new U.S. interest rate hikes next year, though a softer US- Dollar can take losses.

The limited drop occurred even as Wall Street experienced its worst drubbing in 8-months.

U.S. gold futures went up 0.2% to $1,195.89 an ounce and Spot gold fell 0.2% at $1,192.59 an ounce. Ronald Leung, chief dealer, Lee Cheong Gold said "Rising interest rates are not good news for gold. People are preferring U.S. Treasury bonds as they are more attractive in the current environment over gold, despite the sell-off in equities."

Dollar weakens, yen

The Greenback normally viewed as a safe haven in stormy times, but recently shocked some money strategists by drops following U.S. stocks worst decline in almost 8-months.

On Thursday the dollar index, a measure of its worth versus six major currencies, dropped about 0.31% to 95.20, after hitting a high of 95.79 in the previous session.

Also on Thursday Wall Street's so-called "fear index" The VIX, that measures the stock market's expectation of volatility, rose by 44% to 22.96 %, its highest level since April.

Stuart Ritson, head of Asian rates & foreign exchange at Aviva Investors said "In an environment where people are concerned about rising volatility, the dollar tends to do well - especially versus higher-risk currencies such as the Aussie and Canadian dollar."

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