Dmitry Leus of East-West Connect on Last Week's Market Swings
LONDON, February 12, 2018 /PRNewswire/ --
Dmitry Leus of East-West Connect spoke today in London about the turbulence last week on the financial markets when the Dow Jones industrial average tumbled more than 1,000 points on Thursday. Mr Leus said: "The Dow's 4.1 per cent nose-dive put it into 'correction' territory. The rollercoaster continued into Friday, which was a day of wild swings, with early losses in the day followed by a late-afternoon rally that sent the Dow Jones industrial average 330 points higher. But even this late rally could not stop this being the worst week for the market in a couple of years."
When asked how it had come to this, he remarked: "Just two weeks ago we saw record highs set by the major US indexes and we all felt the optimism coming from the World Economic Forum in Davos. Well perhaps we should indeed have expected this correction in the market. Analysts have commented that there is volatility in the market and that this is leaving investors stressed and feeling uncertain and they believe this mood is likely to continue."
Mr Leus added: "The US stock markets started to slump after the US Labour Department said workers' salaries grew at a quick rate in January 2018. It is believed that investors are fretting that increasing wages will harm profits and that such salary rises could mean an increase in inflation. For them, that in turn brings the worry that the Federal Reserve will opt to push up interest rates at a quicker pace, which would in turn restrain the economy."
Mr Leus said: "The swings and volatility possibly also reflect that investors do feel conflicted in their sentiments. Certainly they must feel the stimulus factor for the economy of the Trump tax cuts. But they can't shake off the fear that interest rates will have to bump up, right at the time when the US Government has to borrow large amounts to cover increasing deficits."
He added: "But there is anxiety in the investor community about fiscal and monetary policy. The US Treasury Department confirmed recently that the US Government is set to borrow almost $1 trillion this fiscal year, which is the first year that President Trump will have taken responsibility for an entire fiscal year. To put that in perspective, this is almost double the previous fiscal year (2017)."
Mr Leus also commented on the impact the Dow Jones seesawing had globally: "The turbulence did echo into global markets. Asia seemed the most impacted, as Asian markets fell quite sharply after US stocks went into this correction mode. Europe seemed to have a slightly calmer reaction. Certainly Europe saw losses but more around the 1 per cent mark."
When asked what we could expect next, he responded: "It does seem that investors are readying themselves for more volatility, with the common concern being that inflation will pressure central banks around the world to start putting up their interest rates which would in turn make borrowing more expensive."
About East-West Connect
East-West Connect is a London-based forum focused on investment risk and opportunity in Central and Eastern Europe. We provide news and analysis about the investment and economic climate of the region.
East-West Connect was founded by Dmitry Leus, an entrepreneur and banking and financial services professional.
Share this article