RBA Cuts Rates, Launches Historic QE…ASX Falls

The record levels of volatility on the ASX continue apace this week.

As a quick recap, on Monday the ASX 200 lost 9.7%. Its biggest one-day loss in its 20-year history.

Then on Tuesday the ASX 200 closed up 5.8%. That marked its biggest single day gain ever.

Chagrined traders who thought the momentum may have turned got duly burned yesterday, when the index fell 6.4%.

And today the ASX 200 rallied 2.9% in the first 20 minutes of trading. Only to give back those gains and more. At time of writing it’s down 3.4%.

That’s despite the RBA announcing an out of cycle rate cut this afternoon, bringing the official cash rate to a rock bottom 0.25%. And launching QE for the first time in history by buying Australian government bonds.

This same wild volatility is gripping markets across the world, despite the promise of trillions of dollars in easy or even free money from governments and central banks.

The Dow Jones — down 6.3% yesterday — saw yet another 15-minute trading halt called when rapid selling tripped the ‘circuit breaker’. That’s the fourth trading halt of the month. Unheard of…

The Dow has now lost 32.20% over the past month. And futures — well into the green earlier today — flipped into the red post lunchtime

Clearly this is no market to blunder around in hoping for some quick gains. At least not with any money you’re not wholly prepared to lose.

Proceed with care!

PS: While most every stock has come under selling pressure in recent weeks, The Rum Rebellion editor Vern Gowdie lists five stocks he believes you should consider selling immediately. You can find out which ones, and why, in his free special report here.

Bernd Struben is an Editor of The Rum Rebellion. In this capacity, he has access to one of the most intriguing and powerful networks of practical investment insight anywhere in the world.

Bernd has worked on four different continents, and has more than 20 years of professional finance, editorial, and management experience. He holds a degree in economics.

The Rum Rebellion