Markets losing momentum
Another quiet day is in prospect for markets as traders wind down for Easter. With little on the economic calendar until next week, markets appear content to linger around current levels. Investors have been given little reason to change their outlook in recent days.
The loss of upside momentum in markets is itself a potential concern for traders at the moment. Markets this year have been characterised by consistent directional trends. Once underway, these trends year have been underpinned by solid momentum. However, buyers appear to have run out of steam in both equity and commodity markets at the moment. The recent up trend is beginning to drift and showing signs of faltering. Traders are waiting for underlying fundamentals to catch up with current pricing in commodity markets and there is scope for retracement if this does not happen soon.
Investors now assume the unfortunate reality that sporadic acts of terrorism are part of the world geopolitical landscape. Markets do not see the tragic events in Brussels as an escalation in the constant threat of terrorism which is already high. This explains the lack of macro response to Brussels outside directly impacted stocks like airlines.
The Brussels bombing has been seen by currency markets as increasing the likelihood of Brexit. It gives UK citizens another reason to insulate themselves from the perceived risks of open borders and immigration. The British Pound fell significantly in response to the Brussels bombing but interestingly did not have the same impact on the UK stock market which closed with little change.
Frequently Asked Questions about this Article…
Markets are losing momentum because traders are winding down for Easter, and there is little on the economic calendar to drive changes. The recent trends have been strong, but buyers seem to have run out of steam, causing the market to drift and show signs of faltering.
Geopolitical events like the Brussels bombing have a limited impact on markets as they are already accustomed to the constant threat of terrorism. However, such events can influence specific sectors, like airlines, and affect currency markets, as seen with the British Pound's reaction.
The Brussels bombing led to a significant fall in the British Pound due to increased concerns about Brexit and open borders. Interestingly, the UK stock market remained relatively unchanged, showing little reaction to the event.
Traders in the commodity markets are waiting for underlying fundamentals to catch up with current pricing. There is a potential for retracement if these fundamentals do not align soon, as the recent uptrend is beginning to falter.
Investors have been given little reason to change their outlook because the markets are content to linger around current levels, with no significant economic events or data to alter their perspective.
The lack of macro response to the Brussels bombing indicates that markets do not view it as an escalation in the threat of terrorism, which is already considered high. This suggests that markets are becoming more resilient to such geopolitical events.
Earlier this year, market trends were characterized by consistent directional movements underpinned by solid momentum. Currently, these trends are losing steam, with markets showing signs of drifting and faltering.
Everyday investors should be aware that markets are currently experiencing a loss of momentum and may drift without significant economic events to drive changes. It's important to stay informed about underlying fundamentals and geopolitical events that could impact market dynamics.
Call 1300 880 160
Start a chat
Schedule a call
