Global Markets at threat to further downward pressure

While stock markets are at threat to resuming their fall from last week, the initial movements on Monday do not suggest a widespread global reaction to the developments around the disappearance of a Saudi Arabian journalist. It appears that global markets are still at threat to further downward pressure, but not that the potential of a new geopolitical risk element will add to the current magnitude of risks that are facing global markets.

It goes without saying that a 7% decline in any stock market will never make for a favourable headline, but I wouldn’t rule out the potential of Saudi Arabian markets recovering these losses if tensions do not further escalate after the comments made over the weekend.

Investors are likely at this stage monitoring if any more narrative from influential figures such as the Trump Administration comes out before deciding what might possibly happen next within financial markets.

Such a circumstance would risk adding to an external environment that is already challenging towards investors who become hesitant to take on risk.

The most recent report that the Turkish President and Saudi authorities have agreed between them to open a formal investigation over this development does suggest a market-friendly outcome over the near-term, providing an explanation why the Tadawul Index is up over 2% at time of writing and also why global markets have not reacted that much to this development.