Dow Futures Crash 700 Points as Markets Brace for Another Liquidity Crisis

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  • Dow futures tumbled greater than 700 factors Wednesday evening, pointing to a different risky begin to buying and selling in New York.
  • The U.S. greenback index broke 100.00 for the primary time in nearly three years. The quickest bear market in historical past reveals no indicators of abating anytime quickly. Within the close to time period, this implies a fair stronger greenback.
  • The energy of the dollar proves as soon as once more that money is king in occasions of disaster. Sadly, this might stoke one other liquidity disaster – in international change markets, no much less.

U.S. inventory futures plunged in in a single day buying and selling Wednesday, as money as soon as once more proved to be the last word protected haven in occasions of disaster.

As traders dumped all the things from shares to Treasurys and even gold, the U.S. greenback soared to its highest degree in three years.

Dow Futures Level to Somber Thursday Open

Futures on all three main U.S. inventory indexes traded decrease Wednesday evening. Dow futures plunged by as a lot as 703 factors, pointing to a grim begin to Thursday buying and selling.

On the present tempo, the Dow Jones Industrial Common is ready to open at greater than three-year lows as soon as New York buying and selling begins.

The Dow Jones Industrial Common is on observe to erase all of President Trump’s features. | Chart: Yahoo Finance

S&P 500 futures fell 3.3%. Nasdaq 100 futures were off by 2.4%.

U.S. Dollar Index Soars

As The Wall Street Journal recently reported, markets are entering a phase “where cash is all that matters.”

Nothing was off-limits during Wednesday’s market selloff, as gold, stocks and Treasurys plunged. This massive liquidity event has been ongoing for the better part of a month and has even dragged down non-correlated assets like bitcoin.

The U.S. dollar index (DXY), which measures the performance of the greenback against a basket of six peers, has appreciated 5.1% this year.

After crashing in early March, DXY has gained 6.7% over the past seven trading sessions. It now sits at 101.30, the highest since March 2017.

The U.S. dollar hasn’t been spared volatility, but its trajectory has been higher since the start of the year. | Chart: Bloomberg

The all-encompassing selloff affecting equity, credit and commodity markets is a clear sign there are very few places to hide in today’s bear market. In the process, the U.S. dollar has surged against all currencies, creating a potential liquidity crisis in the FX market.

That’s because nobody in the foreign exchange world wants to bet against the greenback ahead of a potential lockdown in the United Kingdom – the world’s biggest FX trading hub.

Pound sterling fell as much as 5% on Wednesday, en route to its lowest level since 1985.

Several analysts believe London’s trading floors are about to close as the British government enacts stricter controls to combat coronavirus. U.K. Prime Minister Boris Johnson has been following Europe’s lead by increasing restrictions on the local population.

This article was edited by Josiah Wilmoth.

Last modified: March 19, 2020 4:05 AM UTC



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