A sell-off wave has struck the stock market, with major indices heading to their biggest losses since March. The sell-off has been fuelled by growing concerns about a second wave of the COVID-19 pandemic that has already triggered lockdowns in Europe. Uncertainty in the U.S ahead of the presidential elections also continues to rattle sentiments. Robinhood co-CEO Vlad Tenev believes young investors will jump in and buy pullbacks.
Pull Backs Buying
According to Tenev, the young investors who account for the biggest share of Robinhood traders have learnt from the March sell-off and are likely to interpret the current sell-off as a buying opportunity. The markets have held steady in recent months, with small pullbacks followed by strong buy pressure that have powered equities to record highs.
Young investors are increasingly flocking the commission-free trading app in pursuit of investment opportunities. The investors are believed to be the catalyst behind the recent Bull Run that has seen equities race to record highs in total disregard of underlying fundamentals.
Stocks have continued to race amid growing concerns of economic recession owing to the COVID-19 pandemic. Stocks have rallied even on Congress failing to reach an agreement on a new stimulus package needed to address the economic slowdown. It waits to be seen if Robinhood traders will once again come to the rescue and stop the markets edging lower following the recent sell-off.
Morgan Stanley Emerging Markets Bet
Amid the uncertainties, Morgan Stanley analysts are advising investors to focus on emerging market currencies and sovereign credit as they are expected to benefit a great deal from the year-end rally. The Wall Street bank has especially taken note of the Brazil real and Mexico Peso, and the Colombia peso. The bank has also entered long positions on the South Africa rand and Russia Ruble.
The bank is going long on emerging markets currencies on growing confidence about fewer political risks in the near future. The analysts expect returns going forward to be much higher and stronger from credit and local rates.
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