Pulling on market sentiment and investor confidence, fears of a slowdown in China and plunging commodity prices, notably oil, have fueled the risk-off mood.
“It is clear that the ever-declining oil price is public enemy number one,” David Rosenberg, chief economist and strategist with wealth management group Gluskin Sheff, told the Financial Times. “We need stabilization here before the equity markets turn up. China is a risk, obviously, but more in a sense of a general loss of confidence in government policy than anything really to do with a hard landing.”
Surprisingly, as oil prices plunged toward a 12-year low, ETF investors funneled an additional $592.7 million into the United States Oil Fund (NYSEArca: USO), which shows that many traders were either trying to time a market rebound or were increasingly using USO as a means to execute short oil trades.
Max Chen contributed to this article.