Business Irish

Saturday 21 September 2019

More volatility amid shutdown fear

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE)

Bloomberg

Volatility gripped financial markets a day after the US Federal Reserve's rate hike sent shockwaves across assets, while the rising threat of a government shutdown adding to a litany of concerns buffeting equities.

The S&P 500 tumbled to a 15-month low in early trading, and is on track for its worst month of the bull run.

US equities turned sharply lower after President Donald Trump hardened his demands in the showdown with Congress over funding the government, but selling eased as the session entered the afternoon.

"The real issue is the three things markets have been focused on are coming to a head at one time: an aggressive Fed raising rates, fears of a global growth slowdown, and the trade war with China," Cliff Hodge, director of investments at Cornerstone Wealth, said in an interview. "Compounding that is the political headlines regarding the government shutdown. It's all hitting us all at the same time and is causing a major shift in risk-off sentiment."

Currency traders took the Fed's lowering of expectations for future hikes as a somewhat dovish turn. The weak dollar spurred a rally in developing-nation assets. Crude oil added to anxiety on financial markets, with the American benchmark sinking below $47 a barrel. And a renewed U.S. push against alleged intellectual property theft by Chinese nationals is contributing to uncertainty over the direction of the simmering trade conflict.

Almost €950m was wiped off Irish shares yesterday, with the ISEQ index at its lowest in some two and a half years, and almost as low as it was in the immediate aftermath of the Brexit vote. It lost more than 1.2pc yesterday to finish at 5376.61.

Irish Independent

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