What Could Affect Market Volatility This Week?


Oct. 9 2017, Published 2:02 p.m. ET

Volatility remains subdued despite rising uncertainty 

Stock market volatility remains at lower levels despite an uptick in global uncertainty. For the geopolitical corridor, the war of words between the United States and North Korea continued, and Russia said the North Korean regime could launch another missile test over the weekend, which didn’t happen.

Political uncertainty in Spain surrounding Catalonia declaring its independence and the looming elections in Japan continue to keep global uncertainty alive.

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US market performance

The S&P 500 index (SPY) managed to record another lifetime high, closing at 2,549 for the week ended October 6, 2017, after a weekly rise of 0.80%. Similar gains were recorded for the Dow Jones Industrial Average Index (DOD) and the NASDAQ (QQQ), posting gains of 0.96% and 1.1%, respectively.

The US bond market (BND) remained under pressure because of heightened expectations over rate hikes and tax cuts. These same expectations had a positive impact on the US dollar (UUP).

Volatility index speculators continue to bet against volatility

The volatility index (or VIX) (VXX) appreciated marginally in the previous week after Russian reports of another possible missile test by North Korea over the weekend. The index closed at 9.65, rising 1.5% in the previous week. According to the latest Commitment of Trader’s report released by the CFTC (Commodity Futures Trading Commission), large speculators have decreased their overall net short positions to 170,624 contracts from 172,395 contracts through Tuesday, October 3, 2017. With the earnings season expected to be supportive for the markets, there could be a further fall in volatility this week.

In addition to the risks discussed above, the Iran nuclear agreement could be decertified this week, and there’s a possibility of another round of NAFTA (North American Free Trade Agreement) discussions. In the remaining parts of this series, we’ll analyze how different asset classes performed in the previous week and look at the major movers for these asset classes this week.


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