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Pre-Market Report: Geopolitical Jitters Weigh on Global Markets

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Part 3
Pre-Market Report: Geopolitical Jitters Weigh on Global Markets PART 3 OF 4

Why Did Wall Street Indices Fall amid Geopolitical Concerns?

S&P 500

After losing strength on Tuesday, Wall Street indices fell lower on April 12. President Trump’s comments and prevailing geopolitical tensions weighed on US stock markets.

Why Did Wall Street Indices Fall amid Geopolitical Concerns?

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Interest rates and the dollar

In an interview with the Wall Street Journal on Wednesday, President Trump commented that the US dollar is “getting too strong.” He added that he would like to see lower interest rates in the US. His comments made the dollar weaker. On April 12, the US Dollar Index fell as low as 100.01. It’s a knee-jerk reaction to President Trump’s comments on currency. The US Dollar Index is expected to regain strength very soon.

Geopolitical concerns 

Prevailing geopolitical concerns decreased the risk appetite in the market and weighed on stocks. Increasing speculations about North Korea’s new weapon testing have been keeping investors away from the market. There are also tensions with Syria and Russia. The US accused Russia of trying to cover up Syria’s chemical weapon attacks. Geopolitical tensions are keeping the market lower. Also, the lack of clarity in President Trump’s fiscal policies lowered the risk appetite in the market.

On Wednesday, seven out of 11 major S&P 500 indices fell. The materials and industrials sectors fell more than 1% and drove the market lower. The S&P 500 Utility sector, which is generally considered as a safe haven, rose 0.74%. The S&P 500 VIX Index (CBOE Volatility Index) measures uncertainty in the market. On April 12, it rose 4.6% to 15.77. It’s measured on a scale of 1–100 with 20 as the historical average. It’s also called the “fear index.” Generally, it moves opposite to stocks’ movements—it rises when the S&P 500 falls.

Like the S&P 500, the NASDAQ Composite Index fell for the second consecutive trading day. It closed at the lowest level in more than two weeks. It fell 0.52% on April 12 and closed the day at 5,836.16. The Dow Jones Industrial Average closed at 20,591.86—a fall of 0.29%.

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