The calm in stocks worldwide is giving way to concern, with investors in Europe and the U.S. rushing to hedge against declines and a Credit Suisse Group AG index flashing a warning as the list of economic and political obstacles grows.
The Credit Suisse Fear Barometer, which measures the cost of buying protection against declines in the S&P 500 Index, neared an all-time high this week. The higher the reading, the more expensive it is to buy protection relative to upside calls, according to Mandy Xu, an equity derivatives strategist at Credit Suisse.
Credit Suisse’s gauge jumped 46 percent this month through Tuesday, when it reached 45.74. That’s about a third of an index point away from its June 2016 peak ahead of the Brexit vote. The broader CBOE Volatility Index, known as the VIX, is up almost 30 percent this month.
There’s no shortage of potential concerns. Tensions over North Korea’s nuclear program have intensified days after the U.S. fired missiles at a Syrian airfield. There’s uncertainty over the outcome of the French election, with the first round scheduled for April 23, and in Britain doubts are emerging on whether the economy can withstand the political shocks the Brexit negotiations will bring.
Source: Bloomberg
Junior Trader Stefan Panteleev
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