Wednesday, 10th of October 2018 turned out to be a very unpleasant surprise for the vast majority of investors, as stock prices, commodity prices and the exchange rate of dollar dipped significantly. European stock market closed on that day with more than 1% drop in their main stock market indices. This trend continued in the US, with American DJIA index falling by more than 800 points, equaling 3.15% drop in value, while NASDAQ was even worse – 4.08%. Financial analysts conclude that this is mostly caused by increasing concerns regarding the ongoing trade war between USA and China.
Asian continent did not come unscathed either, as the Japanese stock market index NIKKEI 225 dropped by 4.39%, Chinese index SHANGHAI by 4.34% and Hongkong stock exchange market index HSI by 4.39% on Thursday. Due to the fear of lower demand for crude oil, the price of crude oil on the global commodity market fell by 1.69% on Thursday morning, from its former price of 71.93 USD per barrel. Northern Sea crude oil Brent fell by 1.77%, valued at 81.62 USD per barrel.
One of the few financial tools of the global commodity market which managed to survive this onslaught was gold, value of which increased by 0.23% during the Thursday morning, at the price of 1196,10 USD per troy ounce. Based on the assumptions of financial analytics, many big investors could turn their sight to gold, what would mean an increase of price back to 1200 USD per troy ounce in a short-term window. They however conclude that this is purely short-term speculative trading and they are confident that gold has lost its function of a stable asset reserve for now.
The international foreign exchange market – Forex has also experienced higher volatility of its currency pairs, in regards to the dip in value of USD, where investors concerned by the trade war between USA and China lost their faith in the steady increase of value compared to the other currencies, which has been a trend for a while now. Another piece of news that reinforced the fear is the statement released by the International Monetary Fund (IMF), which expects a radical slow-down of the global economic growth. The prognosis even expects a significant dip in the American economic growth. The economic news consider this prognosis to be a result of the increasingly escalated trade war between the US and China, which also influences other highly developed countries such as Canada, Japan and countries of European Union.
Based on all these facts, Forex has responded by a decrease of value of the US Dollar Currency Index (DXY), which compares the value of dollar to six other main currencies in the world, of 0.27%, equaling 95.25 USD. This made, together with gold., the shared European currency euro (EUR) stronger. This currency pair was trading at 1.1555 USD per EUR, with an initial increase by 0.32% on Thursday morning, 7.12 am.