Degree of uncertainty sweeping across financial markets - ANZ

In view of the analysts at ANZ, recently a degree of uncertainty has found its way into previously seemingly bulletproof financial markets.

Key Quotes

“There are four gauges of global market risk sentiment that are closely watched – they of course reflect their own idiosyncratic developments too, but when they all move like they did last night they are a pretty clear signal of risk aversion. Both the VIX measure of volatility in US equities and ‘safe haven’ spot gold prices rose to the highest level since the US election, while another ‘safe haven’, the Japanese yen, strengthened against the rest of the G10 overnight.”

“For good measure, Treasury yields approached the lowest level of the year. So there is clearly some nervousness out there, with geopolitical tensions around North Korea ratcheting higher, and recognition of the small but by no means negligible risk that the French presidential run-off could turn out to be a race between the far right and the far left candidates. But equities are holding up: the S&P 500 is less than 2% off its March record highs, and is still 13% up from its early-November lows. The Euro Stoxx 50 is up more than 17% over the same time period. Hardly panic stations.”