Forex and other markets suffered wild moves with levels of volatility that are rarely seen.
Shortly before the NYSE opened, the S&P 500 Index was expected to open more than 5% down from Friday’s close.
The EUR/USD currency pair enjoyed a range so far from the Asian open last night of almost 400 pips, the last half of which was completed in less than 10 minutes. As at the New York open the pair was up about 2.4% on the day.
Meanwhile the USD/JPY pair made an even wilder move, falling by just under 4% to levels it has not touched for months. At one point it almost reached 116.00, while during most of last week it was trading above 124.00.
Crude Oil is down more than 4% on the day.
Such wild movements are very rarely seen and many market traders will have made or lost more money than they would have ordinarily expected.
Forex brokerages’ back offices and risk management systems will be working overtime this afternoon.
Market observers now wait nervously to see whether the NYSE open will bring bargain hunting or a further rout that could even rival the record fall of Black Monday in 1987. On that day, the Down Jones Index fell by 22.61%, an all-time record that was not even exceeded during the Great Crash of 1929. Of course, it is extremely unlikely that a fall of that magnitude will occur during today’s trading in New York, but if the market falls by another 4% or so, there will be a panic environment.