FXTM: 'you wouldn't catch a falling knife'
The selling in global financial markets is not over and it may be too early to jump back in expecting a meaningful recovery, said Jameel Ahmad, global head of currency strategy and market research at FXTM. The Dow Jones Industrial Average lost more than 2,000 points Monday, although the futures are pointing to a higher open on Wall Street on Tuesday. Stocks in other nations were also beaten down on Monday. “Even following such dramatic drops, the selling isn’t over,” Ahmad sad. “This is clearly an enormously fragile environment for investors and just like you wouldn’t catch a falling knife, there isn’t reason to try and catch these markets either.” Ahmad said the market needs a “hero” that isn’t a central bank or government authorities, but instead an announcement from health officials saying a cure has been found for the coronavirus or at least the outbreak has peaked. “The villain to this story is the virus and the villain is only getting stronger, meaning the signposts remain unclear with dire clouds for investors to find their way back into stock markets,” Ahmad said. He expressed hope that a global recession can be avoided, but said “infection cases still rising would overall increase the probability of a world recession.”