By Isaac Cohen*
The US stock market volatility of this year’s first quarter continues and it may be signaling the end of what The Wall Street Journal called the “unbridled market optimism” of 2017. After a spectacular increase in January, the correction of more than 10 percent in February was followed in March by nine swings of 1 percent, up or down in 11 trading sessions. Some analysts recalled such volatility in a quarter was not seen since 1980.
As a consequence, there is concern that the uncertainty caused by such volatility is spreading into other activities. For instance, the minutes of the Federal Reserve March meeting revealed that a “strong majority of participants” viewed “uncertainties associated with trade policies as downside risks,” Some also noted that “contacts in the agricultural sector reported feeling particularly vulnerable to retaliation.”
Additionally, some currencies are showing increased volatility, such as the Hong Kong dollar and the Russian ruble, while there is concern about China seeking a weaker yuan, in response to US protectionism. Finally, the last monthly report of the International Energy Agency, released last week in Paris, said the potential trade confrontation between the United States and China generates a downward risk to its forecast of increased oil demand of 1.5 million barrels per day in 2018.
*International analyst and consultant, former Director ECLAC Washington Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.
