Global equity rout pushes investors to seek security in gold

Singapore (Dec 26)  With three days of Asia equity trading left for the year and low volumes across the board, traders don’t seem to be taking any chances.

About $5.6 trillion (Dh20.56tn) of equity value has been obliterated in the region this year as the global carnage shows no let-up. And investors are bracing for volatile days ahead, Bloomberg reported.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.5 per cent, to a two-month low. Japan’s Nikkei 225 Stock Average also had a choppy day but ultimately closed up 0.9 per cent after entering a bear market on Christmas Day.

The US stock-index futures fluctuated between gains and losses, with the S&P 500 Index on the brink of entering a bear market when it reopens on Wednesday. Markets in Hong Kong, Australia and New Zealand remain closed for a holiday.

There’s a chance that the 10-year US bull market comes to an end when markets reopen even after US President Donald Trump gave his first expression of public support for Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell since Bloomberg last week reported that the president had discussed dismissing the Fed chief, who was recommended by Mr Mnuchin.

“The direly weak sentiment continues to be the engine behind the declines for markets that have yet to find the panacea in the form of any positive impetus,” said Jingyi Pan, market strategist for IG Asia. “The weight that is given to President Trump’s assurances is simply much lighter than the threats he is throwing.”

US stocks have dropped sharply in recent weeks on concerns over weaker economic growth. Mr Trump has largely laid the blame for economic headwinds on the Fed, openly criticising its Mr Powell, whom he appointed. That has further rattled investors as they grappled with fears of slowing global growth, corporate earnings and US-China trade tensions, Reuters reported.


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