AM Analysis
Asian equity benchmarks encountered one of the toughest sessions last night
Asian equity benchmarks encountered one of the toughest sessions last night since June, with investors suffering a failure of confidence in response to losses and elevated volatility from emerging markets-linked instruments. The CBOE emerging markets ETF VIX jumped 40 per cent as dealers scrambled for protection from derivatives.
And the fear hasn’t been isolated. European and US benchmarks have suffered their worst daily return last week for over 3 months, too – volatility no less expensive. We’re calling the FTSE 100 down some 40 points from Friday’s close.
Elsewhere, the market will turn its attention towards German business climate data out later this morning looking for direction into the afternoon. Then, at 15.00 GMT, the US will release new home sales, which are forecast to fall marginally from the previous number.
– David White
PM Analysis
Growing concerns about emerging markets
Global bourses suffered a down morning today after growing concerns about emerging markets has caused foreign money to run for the exit. China’s recent contraction in manufacturing data has helped build a sense of unease in the emerging markets, if you pardon the pun, whilst emerging market currencies such as the Argentinian Peso plummeted last week. This coupled with recent jobs data that stirred up speculation on accelerated tapering means we could be in for a volatile few days when the FOMC meeting kicks off tomorrow.
The sell-off of emerging markets has provided a welcome boost for Gold, after declining over 25% last year and failing to rally on the announcement of tapering, analysts outlook for Gold in 2014 seemed bleak. With foreign money looking for safe harbours to weather the EM storm, gold looks set to prosper.
– Alex Conroy
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