The US stock market has shown its irrationality
Yesterday’s trading on wall street has demonstrated the irrationality of the US stock market. Measures to reduce tensions in a trade dispute between the US and China provoked the hysteria of global investors. They rushed to buy riskier assets as soon as the markets announced the administration’s decision of Donald trump to remove trade duties on some Chinese goods.
In America decided to postpone the introduction of 10%-s ‘ tariff until December 15 of this year. Upon request of the President of the United States, it is done before Christmas, so American buyers have not experienced pressure. Note that the decision was made after telephone talks, Vice-Premier of the State Council of China Liu he, Minister of Finance Stephen Mnuchin and US trade representative Robert Lighthizer.
Naturally, the de-escalation of the trade war instantly revived the markets – currency, commodity and capital markets. Global investors began to randomly buy all the possible assets, which as of yesterday morning could be classified as undervalued.
Many investment banking conglomerates began to speak about the appearance of leading indicators that signal a possible recession in the United States. Concerns expressed by Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley – these banks have lowered the forecasts on growth rates of US GDP because of a conflict with China. For example, a survey of portfolio managers conducted by Bank of America revealed that the proportion of global investors, who expect the onset of a recession within the next year, increased to 34%. But markets behave irrationally, and yet ignore news and expert advice. So watch out for risks.
Head of analytical Department,
“International financial center”