Bye bye, Dow 20K

Heading into the close, the FTSE 100 is 70 points lower as bearishness takes over says Chris Beauchamp, chief market analyst at IG.

Bye bye, Dow 20K

The market narrative has shifted once again. For the past three months a Trump presidency has been heralded as great for stocks. Now, with Dow 20,000 behind us, it seems his government can be blamed for the bout of selling that has engulfed markets.

The truth, as ever, probably lies somewhere in between these two extremes but there is probably some truth in the idea that geopolitical jitters are playing a part in price action today.

The FTSE 100 has now surrendered all its gains for the year, and indeed is below the October high that marked the previous peak before the record-breaking run in January carried all before it.

Markets overall have been ripe for a correction for some time now,  and were merely in need of a reason to begin. Trump’s rambunctious opening to his presidency, and the lighter volumes caused by holidays in Asian markets, may well have provided the bears with the opening they needed.

The Dow’s sharp fall today raises the unwelcome prospect of more discussion about Dow 20K, only this time we’ll be talking about when we will return to this number, rather than when we will hit it for the first time. However, it looks like we have a clear end now to the rally that has carried US stocks so far in such a short space of time.

Bargain hunters will be hoping that this sell-off has further to run, as they dust off their stock wish lists.

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