Goldman Sachs warns, stock markets may face correction, cites these reasons which investors must watch
options market that could trigger heightened volatility, reported Reuters.
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According to Goldman Sachs specialist Scott Rubner, nearly $2.7 trillion in US stock market derivatives is set to expire on Friday. He explained that if these derivatives are not exercised, they could put downward pressure on stock prices and fuel market swings.
What’s driving the concern?
The S&P 500 and European stock markets hit all-time highs on Tuesday, but have since retreated. The decline comes after US president Donald Trump's latest warning regarding new tariffs on pharmaceuticals, semiconductor chips, and wood, as per Reuters. These threats, among other things, have concerned investors with a full-fledged trade war and have made them nervous.
Additionally, the stock buying trend may be slowing down for other reasons. Retail traders in the US are holding back on trades as they prepare to pay their annual taxes. Rubner noted that the typical dip in retirement fund contributions to mutual and exchange-traded funds (ETFs) around March is adding to the overall market caution, reported Reuters.
The numbers behind the warnings
According to Goldman Sachs, most of the concern is due to the $2.7 trillion of equity options expiring this Friday. These include S&P 500, US ETF, and individual stock bets that will cause a commotion in the market if not exercised. Also, banks
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