The global financial markets often induce stress. Experienced traders got used to ignore any sort of turbulence, but the latest source of anxiety is really worrisome.
The last time when the world came under threat of a nuclear attack was during the Caribbean crisis, but John Kennedy’s talented administration managed to avoid a military confrontation. Nowadays, the United States is trying to resolve a conflict with North Korea, making it clear that Kim Jong-un is better to stop threatening to hit Guam with ballistic missiles unless it wants to run into trouble. This geopolitical tension jolted the global financial markets. Investors are trying not to panic, but the overall sentiments came close to the edge. If investors succumb to market fever, they will trigger massive sell-offs. Bank of America Merrill Lynch monitors the so-called stress index which provides more accurate data than the volatility index VIX. For the last two weeks, BofAML's Global Financial Market Stress Index has skyrocketed and entered the positive territory which is a signal of the sentiment deterioration. However, North Korea is not the only reason behind the market turmoil.
The United States has plenty of reasons to create turbulence. For example, the trade war with China and a tangible threat of a war with Venezuela. That’s why, the stress index is at the highest level since the US credit rating was downgraded in August 2011. It jumped even above the level which was seen in 2015 when the Chinese currency devalued.
