Indices deep in the red as week ends with risk-off flourish


Heading into the close the FTSE 100 is down over 100 points, as indices on both sides of the Atlantic record heavy losses. 

  • Sharp falls for stock markets on quadruple witching day
  • Fed’s step-change on inflation continues to rile investors
  • Dollar in the ascendant as risk-off atmosphere gathers pace

Quadruple witching today means that we should be careful about reading too much into the movement of stocks this Friday afternoon, but for now the general rally in equities appears to have met its Waterloo (at least temporarily). Heavy losses in Europe and in the US are being influenced by options expiry but the second half of this week has taken on a distinctly ‘risk off’ feel, as investors seek to reassess a host of assumptions now that the Fed has changed its own working and outlook for the year for monetary policy. Having seemed so dedicated to the idea of ‘transitory’ inflation and talking markets down that path for so much of 2021 thus far the world’s most powerful central bank appears to have shied away from the implications of such a policy and instead has gone back to the usual playbook of worrying about inflation. This could signal the start of a much more volatile period for markets, certainly over the summer until the Jackson Hole conference, so today could be just the opener to a much tougher few weeks for equities. 

Today is a day for safe haven assets, which at the present time just means the US dollar. Everyone is rushing to the greenback in the wake of the Fed meeting, and this dramatic change of the tides is making itself felt across a host of assets. Even the declines in EURUSD and GBPUSD do not appear to be doing much for European stock markets, and instead we have a classic ‘flight to safety’ that has been brewing for around 48 hours and is gathering pace as the weekend looms. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Feed news

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD: 10-DMA tests corrective pullback above 1.1800

EUR/USD holds lower ground near 1.1840, close to the weekly bottom, during the initial Asian session on Thursday. The major currency pair dropped the most in three weeks the previous day. July’s bottom lures the bears until the quote stays below 50-DMA.

EUR/USD News

GBP/USD: Teases bearish cross below 1.3900 on BOE Super Thursday

GBP/USD remains pressured after declining from weekly top. After posting the heaviest fall in a week, not to forget reversing from the weekly top, GBP/USD holds lower ground near 1.3885 during Thursday’s Asian session.

GBP/USD News

EUR/USD: 10-DMA tests corrective pullback above 1.1800

EUR/USD holds lower ground near 1.1840, close to the weekly bottom, during the initial Asian session on Thursday. The major currency pair dropped the most in three weeks the previous day. July’s bottom lures the bears until the quote stays below 50-DMA.

EUR/USD News

Dogecoin price spooked, leaves DOGE on the outside looking in

Dogecoin price is still up 5,830% YoY, despite the 80% correction from the May high. The volatility has not transferred to this rally attempt as DOGE has traded in an ascending parallel channel with the 200-day SMA transmitting support.

Read more

Bank of England Preview: Five reasons the doves are set to win Super Thursday, GBP/USD may dip

An epic battle between hawks and doves on Super Thursday? That is a dramatic way to view the Bank of England's upcoming rate decision – yet there are good reasons to expect doves to carry the day. That would send sterling down. 

Read more

Majors

Cryptocurrencies

Signatures