American exchanges survived the worst Christmas Eve in history

There has never been a sadder holiday on Wall Street. The S&P 500 fell nearly 3%, suffering its worst Christmas Eve in history. The NASDAQ index of high-tech companies lost 2,21%, Dow Jones - 2,91%.

Photo: depositphotos.com

Brent crude oil closed at 50,43 dollar per barrel. Below the 51 dollar the price fell for the last time in August 2017, writes with the BBC.

Then sales took place on the Japanese stock exchange. The Nikkei 225 index fell 5% to close at 19,155 for the first time since September 2017.

Trading in Moscow also began with a fall in indices. By 12:55, the RTS index fell by almost 2,5%, the Moscow Exchange - by 1,8%.

The day before, both main indices of the Russian market - the dollar RTS and the ruble Moscow Exchange - closed in the red zone - minus 0,7% and minus 1,1%. On Tuesday, the dollar strengthened - by noon it added 25 kopecks.

“On Monday, the color red prevailed on the monitors of market participants - almost all assets lost a lot in price. The last trading session before Christmas according to the Gregorian calendar, which is usually very calm, yesterday turned out to be very stormy and negative,” says the Sberbank CIB report.

Panic sales

Western analysts are less restrained in their comments and describe what is happening with the words “panic” and “fear.”

“It's like panic selling. Markets are "pricing in" the global economic slowdown and are revising corporate earnings downward in advance, said Nobuhiko Kuramochi of Mizuho Securities Co. in Tokyo.

Sources of problems for traders around the world

Last Wednesday, the US Federal Reserve (FRS) raised the base rate by 0,25 percentage points to 2,25-2,5%. This was the fourth time the Fed raised this year.

Next year, according to the documents of the regulator, the majority of members of the board of directors who decide on the rate expect it to increase to 2,9%. For this reason, the Fed leadership quarreled with US President Donald Trump, who on Twitter called on the regulator to stop and not raise the rate.

Bloomberg, citing sources, wrote that Trump allegedly discusses the possibility of dismissing Fed appointed Jerome Powell a year ago.

“The only problem with our economy is the Fed. The Fed doesn’t feel the markets, doesn’t understand the need to wage trade wars or have a strong dollar, or even the need for a shutdown,” the US President said indignantly on Twitter.

The Fed, he said, is "like a strong golfer who can't score because he can't hit the hole-in-one."

The suspension of the US government - shutdown - amid disagreements between Congress and the White House over financing the construction of a wall on the border with Mexico became another reason for the fall in indices. The work of nine out of 15 federal departments has been temporarily suspended.

The head of the US Treasury, Steven Mnuchin, also added fuel to the fire. On December 23, the US Treasury reported that he spoke with the heads of the six largest US banks - Goldman Sachs, Citi, Bank of America, JP Morgan Chase, Morgan Stanley and Wells Fargo.

The question Mnuchin was interested in was whether the banks had enough money. According to the treasury, the heads of banks confirmed that they have enough liquidity to support their operations, and there were no problems with this.

“In the United States, it has already reached the point where the Minister of Finance is calling the country’s largest banks in an attempt to calm the financial world and slow down the decline,” BCS analysts write.

“Frankly, I think it's just going to make markets more nervous and create more panic and fear when it's supposed to add confidence,” JonesTrading's Michael O'Rourke said of Mnuchin's move.

After the statement of the treasury exchange only continued to fall.

How are you doing in Russia

The Russian ruble strengthened by 0,4% yesterday to 68,66 against the dollar. Trade turnover on Monday was small due to limited activity of non-residents ahead of the holidays. The volume of transactions on the MICEX amounted to only $2,1 billion, VTB Capital analysts write.

“We believe that the ruble was supported mainly by exporters, who increased their sales of foreign currency in anticipation of the upcoming tax payment,” the report says.

Tatyana Evdokimova from Nordea Bank noted “high concerns about what is happening in the market.” According to her, the ruble may weaken by 1,5-2% by the end of the year, and levels of 70 rubles per dollar and 80 rubles per euro look quite achievable.

There are two reasons for the fall, she said. Firstly, this is the weakening of oil prices, and secondly, the approach of a long weekend in Russia.

“We may see a desire to completely avoid Russian risk—investments in Russian assets—for those very nine days when we will be on vacation and the rest of the sites will be trading,” Evdokimova explained.

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