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Volatile Market for Shares - Vix Index at an all time low
A critical Review of Commins, P. (2017, May 16). Volatility hits multi-decade lows as US, Europe markets hit record highs from The Sydney Morning Herald.
The Vix index is a matter of serious concern as the market's expectations or volatility is displayed for the 30 days volatility and hence when an all time low in the last 10 years was hit. Wall-street has seen panic strike in the way people behave. Various reasons have been sighted for the erratic behavior of the shares but the primary reason being quoted is the French elections, though it has been in favor of a market friendly candidate but the repercussions of the results are not supporting the notion.
The major influences on a global market are the recent changes that have been taking the market for a spin clearly, only stable behavior is experienced from the Chinese market, but Donald Trump, North Korea and Brexit have contributed to the volatile nature of the phenomenon along with the elections in France. The erratic behavior is becoming an issue as in the brief period between 1993 and 2006 the Vix index has never displayed such an anomaly in terms of behavior or result speculation (Commins, 2017). The global market is responding to the speculation more than ever and bankers have contributed to the notion as well.
The concern is not only regarding the stocks or shares but the drop in the currency value, credit value and markets are claimed to be calmed. The prices for the shares may not vary (Psychoyios, Dotsis, & Markellos, 2010). Hence the Bear and Bulls have a substantial contribution. The worrying of the traders does have an impact and hence the companies need to come up with a turnaround for keeping the calm real and not cooling of the stocks or the market in the process.
The low placement of the Vix does give a direction and a sense of feeler for the future standing for the markets. The predictions are based on the historical data and it mostly points towards the index gradually rising after a slump period. The stocks show a significant increase for the next two or three months (Engle & Gallo, 2006). A very simplistic interpretation of the data is that the fear in the market triggers a fear or a sense of loss in the companies, the entire market gets geared up to fix the situation. The collective fixing does drive the awareness and corrections in the market (Becker, Clements, & McClelland, 2009).
In summary, the analyst are still not alarmed as previously such phenomenon of all time low in the Vix ticker were experienced and the market did not get affected in a strong manner but had an easy going state as shortly the stock prices or shares were found to be rising on its own and not creating a loss for the market. The Morgan Stanley analysts are still being optimistic and stating that the alarm need not be raised. The worst starting point have the brightest of future endeavors in store. The problem is not eminent from the data but an all time low is surely going to push the panic button for the market. Further analysis needs to be undertaken to understand the phenomenon and its consequences.
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