Sell off on heap of bad geopolitical news

Asian investors will be waking up to a slew of bad news from around the world, which have fuelled the demand for safe haven assets.

Gold bars
Source: Bloomberg

On the geopolitical risk front, tensions have escalated in Ukraine with the shooting down of a Malaysian Airlines plane over its airspace, which left all of the estimated 295 passengers onboard dead.

In the Middle East, Israel has stepped up its offensive and has sent troops into Gaza.

How did the market react?

Overnight, investors scrambled for safe haven assets such as gold and the Japanese Yen, while oil prices have crept up. Reflecting the fear among investors, the Volatility Index (VIX) shot up 32.18% to 14.54 – its highest level in three months and sharpest daily spike in half a year.

Gold jumped over 1.4% to $1,319 an ounce – extending a third day of gains. Year-to-date, it has rallied 9.5% amid rising conflict in Iraq, and the US and EU sanctions against Russia.

The Japanese yen held on to its overnight gains, after it rose 0.30% against the greenback.

Oil prices, which gained earlier on the sanctions against Russia, gained more traction. WTI Crude rose by nearly 2% and closed at $103.19 per barrel, while Brent for September rose 1.9% to settle at $107.89.

There was a lot of selling pressure on Wall Street with investors cashing out on fear. This sent all the major bourses lower and the Dow Jones Industrial Index back below the 17,000 point level. 

Ahead of the Singapore Open

Investors are likely to be jittery going into the Asian trading session.

It won’t be helped with rising concerns about a second onshore bond default in China, indicating more signs of stress on the corporate debt front. Builder Huatong Road & Bridge Group might miss its $64.5 million note payment next week and will be the second to do so after Shanghai Chaori Solar Energy Science & Technology in March.

China will be releasing property prices for June later this morning. This will be closely watched after the prior month registered its first drop in two years. Investors are unlikely to have the appetite for any subpar numbers, which could send markets lower.

We are calling for the MSCI Singapore to drop 0.69% to 374.56 points.

Click to enlarge

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.