Despite an emerging sentiment that the brunt of the damage in the local and global share markets was now behind us, it appears markets are determined to push the boundaries to new lows.
In a report published in The Australian, US stocks dropped overnight to new lows not seen in more than a decade as complete risk aversion and the weight of a global recession led investors to either get out or bet against equities once again.
For banks, and all of the companies that rely on the credit markets to sustain growth, a continued fear about what still remains on corporate balance sheets reigns.
“Where there has been smoke so far, there has eventually been fire every time,” said David Klaskin, chief investment officer for Oak Ridge Investments in Chicago.
Overall, the Dow closed down 250.89 points, or 3.41 per cent, to 7114.78, marking its lowest closing point since May 7, 1997. In 10 sessions, the Dow has lost more than 14 per cent and is down 19 per cent for the year.
The broad stock declines have fed into the same level of concern from investors in late 2008, when money managers said many of their clients were increasingly asking for the safest route possible.
“People are totally risk averse to anything right now. They’re backing off any asset allocation and just getting out as it’s going to take a while before any stimulus money moves in,” said Thomas Nyheim, a portfolio manager with Christiana Bank & Trust.
Gordon Charlop, managing director at Rosenblatt Securities, said: “So many people had thought you were at the spot where it didn’t make sense to sell anymore, and that doesn’t seem to be the case. It seems to be the opposite, that there is no attractive level to jump in.”
Filed under: Australian Economy |