Fundamental Comment

Factors Affecting Financial Markets in 2019

Factors Affecting Financial Markets in 2019

Last week, the White House, represented by President Donald Trump, took a sharp tone on China as part of the so-called trade war, which led to the collapse of the stock market and all high-yielding investment vehicles, and a consequent decline in risk appetite.

The forefront of currencies positively affected by these events were the Japanese yen and the Swiss franc, which investors resorted to as safe havens -the traditional role of these currencies- while gold shot up and investors moved away from oil as usual in such scenarios.

With the following lines, dear reader we will identify the factors affecting financial markets this year.

Factors affecting markets 2019:

• Trade war and US-China economic relations, where global financial markets have become hostage to Donald Trump's sudden tweets, perhaps negatively or positively on the same day, but at the same hour and perhaps in the same tweet.

• The raging currency war: The exchange rate is manipulated to influence the ongoing negotiations, for example, the price of the yuan against the dollar reached the level of opening this week to a level not reached since 2008 and this development is not easy as a response from China to the US decision to raise tariffs by additional 10 percent on Chinese imports worth $300 billion.

• The interest rates of US bonds are declining as well as German bonds in a clear translation of investors' desire for safety and escape from any high-risk trades.

• The geopolitical developments in the Middle East and the constant tension between Iran on the one hand and the U.S. on the other.

• The situation in Hong Kong, which Beijing is deeply troubled by the effects of the general strike.

• Political developments in Britain and the increasing likelihood that early Parliamentary elections are a refuge and an inevitable choice.

• Finally, the resort of large investors and investment and hedge funds to cryptocurrencies market, which reflect clearly the increase in volumes in these markets in an attempt by investors to make a precautionary combination of investment instruments. The impact on these markets was also evident in the Bitcoin price surge, as it climbed nearly 20 percent since the Fed interest rate cut at the end of July.

Are cryptocurrencies going to be a safe haven in times of crisis, and has the first rate cut in the US in a decade had a direct impact on Bitcoin's rise from $10,000 to $12,000?

I will try to answer these issues in my next article.

Share Article