Cyber Stocks

We are all a little bit poorer this week as jitters across the pond sent global stock prices tumbling by $4tn. As data showing stronger wage growth triggered a heightened anticipation of interest rate rises, markets around the world started to factor in the increased cost of money. Some have pointed to the start of a more pronounced correction in global asset pricing, although this feels a little premature. The turbulence does, however, highlight a slightly shaky sentiment among investors. Counter-intuitively it seems that the herd mentality is more evident among machines, with high frequency trading algorithms (c. 50% of all trades) getting more spooked by events (or perhaps spotting greater arbitrage opportunity) than their human counterparts, contributing to some of the biggest falls. It is a strange turn of events when humans become the rational, sober thinkers in this equation.