The sell-off in global stocks that briefly looked to have ended mid-week has come back, tipping markets from the U.S. to Asia into declines exceeding 10 percent from their January highs .
Equity traders have yet to get comfortable with a jump up in benchmark U.S. 10-year yields to their highest in four years, and worries over the unwinding of bets against volatility in stocks continue to cast a shadow over markets.
Back home, Indian equity benchmarks resumed sell-off as the S&P BSE Sensex slumped 1.6 percent to 33,849 and the NSE Nifty 50 Index plunged 1.7 percent to 10,398.
BloombergQuint spoke to three global market voices to get a sense of where things are headed:
Outlook for Sensex ‘Not Bright'
Andrew Freris, the chief executive officer at Ecognosis Advisory, said there is nothing to be scared off right now. “Everyone, including my dog and my cat, was expecting the market to come down. The market will continue to fall until the valuations are sensible and reasonable.”
He said the global equity market sell-off, higher fiscal deficit and a rise in interest rates will put pressure on the Sensex.
“Since July, the long-term bond yields have been going up and with the Modi budget they will continue to do so. You cannot have a bigger fiscal deficit and your long-term bonds yields going down. That's just reality.”
He expects the Reserve Bank of India's next move to be of a rate hike not a cut.
‘Higher Yield Curves Never Been Good For EMs'
Nizam Idris, strategy head at Macquarie, said steeper yield curves is not good for emerging markets. He expects high beta currencies like South Korean won, Indian rupee and Indonesian rupiah will do worse.
“In the second half of 2018, global central banks will be syphoning money out of the system and printing it. This is the first since 2009 that central banks are doing so. It is something new that people have to price in.”
‘Market Structure Is Rotten. It's A Mile Wide And An Inch Deep '
Interest rates are going to be significantly higher and equities are going to be significantly lower, according to Michael Every, head of financial markets research for Asia-Pacific at Rabobank.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
