Selling intensifies across equities
|European indices have suffered a rout in early trading, with the FTSE 100 down over 170 points. Oil is falling too, ahead of the OPEC decision today.
The pace of selling across indices is moving from ‘gentle’ to ‘waterfall’ as the FTSE 100 touches a fresh two-year low in early trading. The story is similar across Europe, while US futures are not looking remotely pretty. Investors are fretting that the arrest of a Chinese executive in Canada threatens to undo what little good work came out of the G20 meeting at the weekend, and that Beijing will respond with an escalation of trade tensions. Already worried about the economic effects of trade wars, investors are now concerned that this will move beyond the realms of tariffs and into much broader economic and diplomatic conflict, with dire implications for global economic growth. In this
kind of environment, equities look overvalued, and thus we should expect the losses to deepen from here.
Meanwhile, the selling has intensified in oil markets too. The Saudi oil minister might think a one million barrel per day cut in output would be ‘sufficient’, but the market thinks otherwise, and oil prices look set for further declines. Barring some kind of surprise, OPEC looks to be heading towards a cut that fails to assuage concerns about oversupply, but at least it might avoid the ire of the president.
Ahead of the open, we expect the Dow to start at 24,577, down 450 points from Tuesday’s close.
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