World stocks sank to their lowest levels since 2013 on Wednesday, hit by another tumble in oil to 13-year lows that kept equity markets on track for one of their worst monthly performances ever. US markets were hit hard on the open, with the DOW down 200 points around close and the S&P500 dropping 1.5%, clawing its way back from an early 3.4% loss. European, Asian and emerging market stocks were unable to avoid the sell-off, with the FTSE and DAX taking hits of 3.5% and 2.8% respectively. The Nikkei officially entered bear market territory with a 3.7% loss, down 21.3% off its June 2015 high.
The safe-haven JPY soared however, as risk appetite soured, dragging the USD to a one-year low (USDJPY briefly dipped under 116.00) as investors trimmed the chances of more tightening by the Federal Reserve.
Traders looked to a Bank of Canada interest rate decision for a potential trigger for markets, however were left empty handed as the BoC held on rate cuts. The CAD fell to a 13-year low ahead of the meeting, dragged by the sliding price of oil, having recovered since. Oil prices continue to slide down as Brent dropped to $28 per barrel in early trade, nearing the 12-year low recorded at the beginning of the week. WTI hit $27.4 per barrel, its lowest level since September 2003. In the previous session the prices soared above the $30 per barrel mark before collapsing again. Traders will be looking to EIA’s release of Crude Oil Inventories data to determine if further downside is justified.
Gold on the other hand has soared to over $1100 as the precious metal is sought after amid a pessimistic stock market environment.
Trading quote of the day: You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets. Peter Lynch
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