Stocks, Commodities Take a Beating
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Today was a rough day for equities and for commodities, in spite of optimism oozing out of this past weekend’s G8 meeting. World leaders got together to talk about economic issues, and did a lot of back patting over signs (“economic green shoots”) that the global recession may be coming to an end. However, investors proved today that sometimes what world leaders think is good news isn’t quite good enough.
After seeing a rally, global stocks and commodities are experiencing something of a correction. Clearly, investors are not as sanguine as G8 leaders with regard to the global economy. Instead, they are concerned that economic recovery may not be right around the corner. While many investors are cautiously optimistic that the recession could end by 2010, there are still questions about the current health of the economy. In the U.S. unemployment is approaching 10%. Home prices are still falling (and mortgage rates are inching up). Gas prices have been on the rise, since oil prices have been rallying recently. These facts have investors re-evaluating their near-term enthusiasm. MarketWatch reports on the shift in sentiment amongst investors:
“U.S. markets seem to be getting more sensitive to negatives than positives after hitting their short-term peaks, indicating strong profit-taking demand. This will likely lead foreign investors to look for chances to book profits in emerging markets,” said Oh Tae-dong at Taurus Investment & Securities.
Eventually, the stock market is almost certain to recover. As the economy starts to heat up again (as employment picks up and the housing market stabilizes), stocks and commodities are likely to rise. The current pullback is likely to be temporary; now is a good time to consider buying while prices are still relatively low.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
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