US Stockmarkets show signs of Fear Post Trump Election highs

Even though equities have consistently clocked new highs, there are signs of nervousness in the United States stock markets. The fear barometer at Credit Suisse went up during the end days of the second week of March to 35.6. This is a rise of nearly 10 points compared to previous week. The number is also the highest since November 9-the date after Donald J. Trump surprisingly won the election. Credit Suisse takes into account three-month options available in Standard and Poor 500 index. These will determine the willingness of investors to forego upside profits so that they get protection if things began to slide. Higher levels of sliding risk mean a higher readings to be presented to traders.

Federal reserve meetings and results

Investors are keen to know what will happen at the Federal Reserve Meeting to be held during the third week of March. They expect the policymakers top raise rates for the third time after the country got its financial feet, shaking off the financial crisis. The increasing nervousness of Wall Street comes as American stocks went up to new highs due to optimism with regard to corporate earnings. Other positive aspects include a better economic outlook and expanding fiscal policy.

According to Mandy Xu of Credit Suisse, the increase can be attributed to the widening of the risk premiums imposed on the US corporate bonds. The junk graded US credit spread, tasked with measuring bonds yields with Treasuries of in identical duration, went up 4.04 percentage points. As per Bank of America Merrill Lynch, On March 1, it was 3.78 points.

Share values up and down

The S&P 500 index, widely considered as the principal index of the American stock markets, went up by six percent from end 2016. However, it closed up better than one percent only for a single time until now in 2017. It is yet to close down more than one percent this year. The phenomena highlights the fundamental volatility.

In other new, Alibaba shares went up about 1.7 percent to $105.18 posts reports of this Chinese eCommerce group are engaged in discussions with banks to collect a funding amount of $5 billion. Alibaba wants to increase its footprint in the arena of big data and cloud computing. The aim of such activities is to diversify the company’s revenue streams. The rise of its value on March 13 makes Alibaba’s gains in year-to-date to about 20 percent.

Leave a Comment