Forex futures ‘stagger’ as UK’s stock market falls 7%
Forex markets across the globe are plunging this week as a sell-off in the UK’s financial sector is seen as a signal that investors are less confident about the future of the financial system.
Forex volatility has been the topic of discussion in financial markets for months, with concerns growing over the future health of the UK economy, which is facing its worst recession since the 1930s.
The UK stock market, which was trading above its 200-day moving average (MSAs) in the middle of September, has been sliding more than 8% since early October.
Forextracts, which measure the market’s movements against the greenback, fell as much as 7.4% from their high in early October to close at £2.20 on Thursday, the worst performance since December, according to the S&P 500.
Forey, which measures the market volatility, fell 3.3% on Friday, its worst decline since March 2016.
“The UK economy is currently facing the biggest jobless rate since the Great Depression, and the latest government figures are worrying investors,” said Brian Balsamo, chief market strategist at Balsamow Investment Management in New York.
“However, if this latest weakness continues, we could see a sharp sell-offs across the markets by the end of the week.”
The US has also been a big loser, with stocks on Friday falling more than 7% from a high of $60.40 per share in early September to $58.96 on Thursday.
The S&am index has been on a tear of more than 10% this year, though the Dow Jones industrial average has lost more than 17% since the start of 2017.
The market is now looking at a total loss of over $200bn over the next five years, according the Sivaji Group, which tracks stocks in the US.
Forests in Asia, Europe and the Middle East are also suffering, with a major drop in commodity prices.
Forex markets in Europe and Asia have been particularly vulnerable to the sell-in that has taken place in the financial sector.
The Financial Services Authority of Singapore (FSA) on Friday suspended its financial services market trading, citing concerns about the sustainability of the economy.
The FSA is part of the Singapore-based Financial Supervisory Authority (FSSA), which is responsible for monitoring and supervising financial market activity, including the FTSE 100, S&ams 50 and 100 index.
It was unclear whether FSA would reverse its decision on Friday or if the agency would continue to monitor the financial market and take further action.
The financial markets have been trading at their highest levels in nearly three years following the global financial crisis in 2007 and the global recession in 2008.
The global economy is on a recovery and the UK is facing a recovery that could last a year, with the Bank of England forecasting that the UK could be back to growth in 2019.