European shares continue to fall hard. The trigger began as the US markets were hit hard during yesterdays trading session, as investors were seriously concerned about a possible trade war and US bond yields.
Asian stocks joined in the trend as they plummeted to an 19 month low overnight. Share price valuations have been extremely high and this global sell off may not have come as a surprise to many. Experts have been predicting a crash in the markets for at least the last 12 months. The markets in the USA have been soaring to new all-time highs constantly, while indexes such as the FTSE 100, although they have retraced from their recent highs, are still at a very high valuation.
These were dangerously high levels to be at for the markets just as president Donald Trump began to criticize the US central bank. The president directed some comments straight to the Federal Reserve yesterday, labeling them “crazy” for their recent interest rate hikes.
These comments triggered the sell off which amounted to a loss on the US markets of over $800 billion. Investors should indeed be worried.
Oil (NYSEARCA:USO) prices are currently adding to the worries. Iran has vowed not to let Donald Trump’s stance on oil sanctions to hit their exports. According to reports, Iran is making plans to revive “middlemen” who will be allowed to buy oil on energy(NYSEARCA:XLE) exchanges. Iran needs oil exports, and surely will not back down without a fight.
And in among all this turmoil, the US dollar (NYSEARCA:UUP) remains relatively strong. It has pulled back slightly from the recent highs of early October, but it remains in an upward trajectory. This strength in the dollar is impacting gold(NYSEARCA:GLD), and the current gold price remains low, just below $1200.
Investors globally are hoping for some strength in the stock markets before the festive period. It’s often a strong time for share prices. So all eyes will be looking to November hoping for a change in direction.