Tony Pasquariello, Goldman Sachs global head of hedge fund coverage, said that the worst of the global market sell-off may be over, but investors still need to be more vigilant when opening large positions. He called the week's moves in the market since Friday "a global margin call."
The latest market collapse was caused by increased concerns about the recession in the United States and an unwinding of yen-funded carry trades. The S&P 500 index fell almost 6% in just five trading days in August, while Japan's Nikkei fell 10%. Meanwhile, USD/JPY bounced off a 38-year high at 162.01 and fell to its lowest level since January 2, to 141.68. Currently, USD/JPY is trading at 145.88, with a decrease of 0.55%.
"The worst stage of the last market storm is probably over, but I think the skew is towards ongoing selling by the trading community. Major market participants are likely to remain in the sell-off mode for some time. Against this background, retail traders are likely to lack confidence until the upside trend is clearly reestablished," added Tony Pasquariello.