Utter panic has spread throughout the capital markets, Finexo Online Forex
Utter panic has spread throughout the capital markets, as it now appears that “Europe’s” problems could very well spread to the rest of the world. Investors concerns remain heightened that credit instability will push business financing costs up, limiting the world’s economic growth. The result of this “doomsday” scenario would a drastic drop in the demand for both goods and services.
Not a finexo Online Forex user, yet? Register here.
Both commodities and stocks tanked last week, falling more than 10% from their highs. Financial stocks were also hit hard, as they are large holders of corporate and sovereign debt, whose prices have declined. In regards to commodities, the CRB Commodity lost over 10% in less than three weeks; while Crude Oil, the leader of the pact, gained nearly $2o from its 2010 high of 87.00.
Not a finexo Online Forex user, yet? Register here.
Even Gold, which rallied on the back of safe haven buying to hit a record high of 1250, was hit hard last week as it stumbled back to the sub-1200 level. Overall, commodity prices will remain under extensive pressure, as excess supply has been dumped into the market at a time when demand has waned.
All of the above has fueled to the Dollar to appreciate against its major currency counterparts as worldwide investors continue to flee to more “risk adverse” currencies.
Up ahead, investors will want to see if the recent drop in stocks and commodities is based solely on profit taking or whether it is the result of a more long term rotation out of riskier assets. This week, the U.S will report its Consumer Confidence, Durable Goods Orders, and Housing figures. If these numbers are better than expected, it will indicate that last week’s selloff was overblown and economic growth is taking place.
Not a finexo Online Forex user, yet? Register here.
