Global stocks are expected to post their first loss in 5 days at the end of Monday’s trading session in the US, ending a series of gains that have seen a recovery of almost half of their losses from the violent sell-offs two weeks ago.
Today’s trading session was relatively quiet, especially with the holiday markets in the US and China, and losses in the European region affecting global stocks prices, which were previously supported by gains in Japan. Although the European markets started their trading session positively, this afternoon the European Stoxx index fell by more than 0.5%. On another hand, a weak update from Reckitt Benckiser Group came out, a specialist in the consumer staples sector.
The top gainers in the European markets today were Tenaris, Outokumpu and Arcelor Mittal, which all have facilities in the US, with profits ranging from 1% to 4%. The MSCI World Index, which tracks shares in 47 countries, fell by 0.1%, although it recovered from half of what it lost between late January and the lowest level reached last week. The 4.3% gain at the end of last week was its best weekly performance since December 2011.
A wave of concerns about rising inflation in the US has wiped out more than $6 trillion worth of global stock markets. The sell-off took place despite the fact that global growth helped improve corporate earnings expectations.
Before the global downturn, global equities were trading at 16.66 times their expected profit, their highest level since 2004. Investors gained some confidence in the decline in VIX shares, a measure of implied volatility in the S&P 500, also known as the “Fear Scale” on Wall Street. The index remained below 20 points for three days and was last reading at 19.46. It jumped to a high of 50.3 two weeks ago, a spike that caused heavy losses among investors who bet on the stability of equity markets in a combination of strong economic growth and moderate inflation.
The minutes of the Federal Policy Meeting will be held next Wednesday, the target of which was the shares at its last meeting on January 30 and 31. In addition to expectations on prices, markets will be anxious to see if the Fed is converting or circulating in markets.
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