It’s looking rough out there at the open again as equities are being hammered lower. Investors are seeking shelter amid the US-Iran conflict and the favoured play right now looks to be the dollar. Think back to the impact of the Russia-Ukraine conflict but likely to be on a smaller scale. However, the aftermath is likely to be the same as households and businesses have to deal with the reverberations of a temporary spike – a massive one at that – in energy prices.
In the equities space, we’re seeing European stocks struggle hard in digesting the latest developments. The lack of a tech carry anchor isn’t helping, which was what saved Wall Street yesterday. But even today, US futures are also having it rough in the early stages.
- Eurostoxx -2.0%
- Germany DAX -2.1%
- France CAC 40 -1.7%
- UK FTSE -1.4%
- Spain IBEX -1.9%
- Italy FTSE MIB -2.3%
What is notable about the latest drop is that it has taken away a lot of the optimism in European stocks to start the new year.
The drop this week has effectively wiped out the year-to-date gains for the DAX. Meanwhile, the rest of the CAC 40, IBEX, and FTSE MIB have seen year-to-date gains cancelled out to just barely 1% now. Pain.
And the bleeding could get worse if we see Wall Street fold over later in the day. US stocks recovered well in trading yesterday, with the S&P 500 once again defending its 100-day moving average
