All three major U.S. indexes — the Dow Jones, S&P 500 and Nasdaq — have dropped at least six per cent so far this month. (AP Photo/Richard Drew)

Market jitters lead to more declines as investors face growing risks | CBC News

North America has been affected by a month that has definitely not been flattering since it has been very unstable for investors in the North American markets. In fact, the 3 main indices of the United States, the Dow Jones, the S & P 500 and the Nasdaq, have fallen at least six percent so far this month. While for its part, the S & P / TSX compound of Canada is not far behind with a decline of 5.5 percent in October.

Likewise, investors could face considerable risks that continue to increase.

More affected companies

Several industrial companies such as Caterpillar and 3M sank more than 5.7 percent and 4.4 percent respectively in New York on Tuesday. Falling them have been denoted in earnings reports, which disappointed investors and ignited fears about how rising borrowing costs, wages, and tariffs will affect the company’s bottom line.

Many companies that accelerated purchases before rates now have excess inventory, and that higher supply chain costs are likely to be an obstacle to profits for many years to come.

On the other hand, the executive director of macro strategy at CIBC Capital Markets, Bipan Rai, expressed that there are definitely more risks ahead. The same is because central banks are no longer providing the degree of liquidity they had in previous years.

Added to this, Rai pointed out “Everything else is the same, the most relevant is the history of withdrawal of liquidity, considering that this is what increases the rate at which future yields are discounted” and likewise added “The withdrawal of liquidity will first affect assets with higher premiums, such as emerging market assets and global equities, before they become other assets. This is an issue that markets will have to deal with in the coming quarters”.

Read more.

Source: Rajeshni Naidu-Ghelani | CBC News