A very brave Joshua Mahoney of the IG platform faces an incredibly tricky time explaining the carnage in all sorts of markets on the morning of Monday 9th March 2020 – plus, trying to forecast the next step. Well done, we say, as this is precisely the time and space when we need clear advice and cool heads.
Like me, he’s focused on the weekend’s 30% drop in crude oil prices – rather than blaming everything on the Corona virus – and the fact that this has caused a massive drop in developed market indices: think BP, Eni, Exxon, Chevron, Petrobras and YPF. All have a major weightings in their respective indices, and are responsible for a big chunk of dividend payments.
He explains that US stock futures are stuck ‘limit down’ – and if you don’t know the concept, look it up – which, coupled with gold volatility and US dollar weakness make for very unsettling bed-fellows.
He claims that recent surveys have put the chances of another Fed 100 basis point interest rate cut at 63%, another 27% of those polled suggesting a 75 basis point cut.
Japan, he suggests, has regained its safe-haven status – something I think might be a belated knee-jerk reaction – as has gold. What is very interesting are the statistics of IG customers long versus short positioning. Asking: ‘’are the bulls going to come back into play’’, their stats say on Germany’s DAX 60% of clients are long, while with Italy’s MIB 62% are short, and in cable 58% are long.
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