Several minutes ago, a Malaysian Airlines Boeing 777 was apparently shot out of the air, killing all aboard. Initial reports suggest that the missle that was fired at the plane, came from either a Russian or Ukrainian terrorist. If there were any Americans aboard that flight, it will certainly provoke an unfriendly political response from the US Government. In the minutes following the news, the stock market is plummeting, and the the price of Silver and Gold are surging. Do these types of news stories traditionally affect the markets in any long-term way - or could this simply be a brief over-reaction of the markets, to news that has potentially long-term political inplications ??
IF.. and I say if.. it was shot down, it will impact prices as long as threats are being made for more sanctions, increased fighting etc. If it wasn't shot down, the panic will cease and prices will go back down and stocks will go back up. If other countries start to get involved, look for more PM price increases and an even lower stock market.
Apparently this isn't going to make any sizable impact on either PMs or the stock market. Metals are going back down, and the stock market is going back up.
If it was a missile strike, then there would be a limited number of countries that have the capability to shoot a plane at that altitude or have fighter jets that can fire air-to-air. Of there countries, there are very few that would benefit from this. The countries that would not benefit are Russia and Iran. That doesn't leave too many other possible culprits if this was indeed a plane that was taken out by a missile. Depending on how this unfolds, this could have short term moderate impact on pm prices....the operative word being "could". .
The quick moves / swaps between products / markets are quite often by programs that are written to scan markets for 'opportunities'. Any event, good or bad, can serve as trigger to spit out the corresponding buy/sell orders. The rest is then supposed to follow, and pay the profit. If that doesn't work out, the opposite orders are given, and back to origin. Stock markets sit on record highs. Some nervosity is quite normal then haha. If they sell prematurely, they give away their position in the buying order. If they sell too late, they give away their position in the selling order. Usually the red candlesticks happen much faster than the series greens ahead of them. See, it needs time to convince others to pay that higher price. But to sell, all it needs is a trigger that is big enough. And the higher the level, the smaller the trigger that is needed. One day a mosquito on the nose of Obama will suffice to trigger another ehm... apocalypse of hurry hurry sell then ow is this IT? Ow let's sell too! Panic! Everybody hammering sell buttons in order to grab at least a 'mug of that 5 years profit uptrend.
I find a rough rule of thumb is the 3 day effect. Single bits of news will not effect a permanent change in trend, no matter how bad the news. It tends to take 3 days for short term effect to wear off and the trend resumes its original direction.
Bad news does tend to have a negative affect on the stock market and I agree with Icon. The driving variable will be sanctions proposed if any. When the U.S. originally proposed sanctions again Russia for invading the Crimea peninsula the European markets and the U.S. markets fell. If this is act is linked to Pro-Russian fighters and people perceive sanctions may be levied, I think we will see a movement in both stock markets and PMs.
True.. but I believe more people trade on impulse and the six o'clock news than then true research and data. If the masses believe there could be financial fallout from what is being used as the headline of the day, investors could over react or feel the need to be the first to act and sell securities and purchase safer investments.
The u.s. Dollar index didn't move at all. If there was any genuine threat in Europe, this baby would be the first to rise.
so they are purchasing silver for the zombie apocalypse when the russians begin discharging all those dormant nukes left over from the cold war?
It also says something about the fragility of the market. And of course, how much over reaction from the dealers in these markets? Commissions are made whether falling all rising. "Sell, sell, sell!" "Buy on the dip, buy on the dip!"
That index is just a weighted value based formula from a basket of currencies. The US dollar index nearly can't rise without Euro dropping, and vice versa, because those two have the biggest weight in the formula. Every rise or drop implies another (or more) to do the opposite. Simultaneously. No first and no last.
Btw we're talking about 40 cents and such changes occurred like hundreds times the last 12 months. Don't focus too much, you may miss the truck that cuts your daisy.
That is correct Pirocco. Any real European upheaval will send capital fleeing overseas to the safest place. This would drive the Euro down quickly. This did not happen. Not yet anyway. It would seem that this was news that investors deemed will not amount to much.
Not exactly... but sometimes, when there is a sense that the US might be preparing to ramp up an increased military response, the printing presses start churning more paper dollars to pay for it. This eventually leads to increased inflationary fears, which can cause investors to seek safer places for their money, which may include increased interest in the precious metals - consequently leading to higher spot prices. The answer to my question, will not be known until we learn whether this was a one-off event, which will be treated as a tragedy, or part of a larger situation requiring an official response, to prevent further attacks.
The currency world is related. The dollar index is related. Because the central planners cooperate. Because they make sure that every single currency stays within a determined relation to the other currencies. As to avoid any single one to become too strong, or too weak. What happens then, if speculators get that part? Does their capital 'flee' to another egg in the basket, or does it leave the basket? What is the situation euro / dollar? If you look at http://finviz.com/futures_charts.ashx?t=6E&p=w1 and http://finviz.com/futures_charts.ashx?t=DX&p=w1 You may notice that their current values sit around their multiyear averages. In central planners techtalk, that is named as snakes in the middle of their tunnels. Well, that's possible at any general prices level. Including hyperinflation, wherein the so-called safest place is still a place that, relative to the outside of the basket, sucks big time.
It was a Malaysian airplane, so it's like... oh well... :| If it had been an American airplane it would have been like... what? How do they dare? Bomb, bomb, bomb!!!
Perhaps not so true....this story is not even 24 hours old at the moment (by me). The US could use any excuse to further sanctions on Russia, regardless of whether or not it's a Malaysian owned plane. Keep in mind that initial reports (here) were that there were some American's on board. This will be a big story at some point I think....it will not disappear off the (media and political) radar as quickly as the plane believed to be lost over the Indian Ocean. .
