Hong Kong’s protests complicate already fraught trade war tensions, and the markets know it. So why are they so stable?
- Looking not only at major stock indices, but also gauges of consumer worry, there is little indication of global turmoil
- This shows how powerful even glimmers of hope are; still, uncertainty over tariffs needs to end to keep the rally going
For most of 2017, the VIX Index, Wall Street’s “fear gauge” measuring the anticipated volatility in the benchmark S&P 500 index over the next 30 days, hovered around the 10-point level, just a tad above its all-time low. This was before the trade war erupted, and when the global economy was enjoying its broadest synchronised expansion since 2010.
On Wednesday, the index stood just below 13 points, having surpassed the 20 mark – its average level over the past 30 years – as recently as early October.
Yet, in a sign of the extent to which equity markets are downplaying these risks, the S&P 500 has gone more than 30 sessions without suffering a back-to-back loss, the longest stretch since 2005, according to data from Bloomberg.
What is more, the index’s daily swings from peak to trough have averaged only 0.5 per cent this month, the lowest level of volatility since 1993, with the exception of 2017, the calmest year for the gauge since 1965, data from Bloomberg shows.
