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What is behind the fall in stocks? - Investec

FXStreet (Łódź) - Jonathan Pryor, Corporate Treasury Analyst at Investec is looking at the possible reasons for the recent drop in stocks.

Key Quotes

"With little out of the UK yesterday, the headlines were Stateside with the S&P 500 closing back below 1900 as stocks continued to lose ground yesterday, 7% off from the year's highs above 2000. There are a few theories why stocks have started to give back the gains they have steadily made since the last round of QE began in the US."

"The fall could be attributed to the end of QE, expected later this month, a program that has helped corporate America find cheap money for investment. A similar fall in stocks occurred at the end of the previous two QE programs in the US, although this time there are other factors that may be of influence."

"One could argue that risk appetite has turned lower because the IMF/World Bank meetings in Washington last week highlighted the risks from slowing global economic growth. There is also the spreading of the deadly Ebola virus into the US in what the World Health Organisation is calling a 'crisis for international peace and security'."

"Finally investors could be reducing long equity positions ahead of the Q3 Corporate earnings season that begins this week because the strong US Dollar trend of the last few months may have hurt profit releases. Whatever the reason for the fall in stocks, we have seen the effects filter into the currency markets, with the US Dollar buying spree halting as traders wait for further developments."

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