Nomura Warns of a Second Sell Off

Investors shouldn’t take much solace from Tuesday morning’s slight rebound, says Nomura. They are warning the next sell-off could resemble a crisis-level plunge like the one that followed Lehman Brothers’ collapse.

This view is much more catastrophic than the rest of Wall Street with most firms predicting a stock market correction (down 10%) at most and likely just a slight pullback. Nomura is basing its view on data showing hedge funds fleeing the market and said more are set to exit when their algorithms are triggered by rising volatility.

Stocks are set to rebound from their worst day of the year on Tuesday as China stabilized the yuan, which many believed was used as a weapon in the trade war with the U.S. The Dow Jones Industrial Average dived 767 points on Monday, its sixth largest point drop in history, after China allowed its currency to breach a psychological level and also halted purchase of U.S. farm goods. The Cboe Volatility Index, AKA Wall Street’s “fear gauge,” swung to the highest in 2019 on Monday.

vai CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.