ECB now shooting with both barrels
The asset classes that are not untouched in some way by events in the Middle East are becoming few and far between. The two-day decline in US stocks has been the steepest in percentage terms since July of last year, with the rise in the VIX over this week the largest points increase since June. Emerging equities, which did stage a recovery last week, are now threatening to push fresh lows for the year in Asia, the Indian Sensex down another 1.5% today. As we've noted before, the traditional risk flows of last year are not playing out in the same way, with the dollar having barely benefitted from the weaker tone to equities. Some of this has been owing to the euro gains on the back of hawkish comments from officials, but it's telling that both the Swissie and yen are proving to be the preferred safe harbours. |
