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STOCK markets ought to be sizzling with excitement this week, a casual observer might think, given a double dose of good news from the United States.
However, soothing words from the US Federal Reserve on rock-bottom interest rates and a big vote of confidence in the US economy by legendary investor Warren Buffett have generated little buzz.
Mr Buffett's ability to move markets appears to be waning after news of his US$26 billion (S$36 billion) buyout of a US rail-road operator fell flat.
And little jubilation greeted the Fed's decision on Wednesday to keep interest rates steady with a statement that no rate hike is in sight, even though they have been close to zero for eight months now.
Rather, uncertainty fills the air, as skittish investors sent share prices slipping across Asia yesterday after they bailed out of stocks and fled to the sidelines.
Mr Buffett waxed lyrical over his optimistic outlook for the troubled US economy, billing his latest mega investment as an 'all-in wager on America's economic future'. But other big-time investors are considerably less certain.
Coinciding with Mr Buffett's purchase was a move by India's central bank to swop US$6.7 billion of US government bonds for 200 tonnes of gold.
Some interpret this as a nervous bet against the ailing greenback even though the exercise was simply described, in officialese, as 'reserves management'.
Amid such uncertainty, it is unsurprising to find markets descending into a listless stupor, as traders all over sit tight.
The result: Even Asian markets, buoyed of late by resurgent local economies, have turned sleepy too. For the past two days, daily turnover on the Singapore Exchange dwindled to about $1 billion - or half of the $2 billion that was changing hands daily only two months ago.
Sleepiness is not all. The trading fall is tinged by a raw emotion that had disappeared as share prices rallied - fear.
After falling for the past seven months, Wall Street's Vix Index - the so-called fear gauge as it tracks stock market volatility - has returned to March levels, amid bigger swings in share prices.
So just what is eating into investor confidence after widely watched indexes such as the Straits Times Index rose last month to their highest levels this year?
The seven-month-long rally was triggered by the Fed's decision in March to cut interest rates to almost zero to nurse the US economy back to health.
But the move lured traders worldwide to 'short' US dollars and take up massive greenback loans to make giant bets in equities markets.
This sparked off a huge rally in three groups of stocks.
First, the resurgent technology sector; second, oil stocks powered by a China-led commodity boom; and third, battered financial giants whose recovery has largely been fuelled by sightings of 'green shoots of growth' in the global economy. But the rally of all three has stalled recently.
The sputtering of the run-up in technology stocks must have befuddled many investors, given dazzling results by iPod maker Apple Computer, and chipmakers such as Intel and Texas Instruments.
But one bogeyman is casting a long shadow over the sector: the arrest three weeks ago of giant hedge fund Galleon Group's co-founder Raj Rajaratnam for alleged insider trading offences.
The probe's widening scope, which touched even a former chairman of chipmaker AMD, spooked hyper-active hedge funds which specialise in trading tech stocks. While hedge funds may not be the biggest shareholders of these firms, they are often the main traders of the stocks, giving much needed liquidity.
With the Galleon fallout, however, they have become more circumspect, causing a drying up of liquidity worldwide, hurting tech-heavy bourses such as Taipei and Seoul as they switch into cash.
As for banks and oil stocks, few traders are willing to take further bets on them, until they get a clearer road-map of where the global economy is headed.
The eye-popping third-quarter profits produced by financial giants such as Goldman Sachs and JPMorgan Chase offered little solace, as they had come from trading and not from traditional banking activities like extending loans to customers.
Even a better-than-expected set of US job data for last month, due to be released before Wall Street's opening tonight, may not lift the pervading market gloom.
Some traders fear that this may prompt the US central bank to start removing its ultra-loose monetary policy, whose chief effect has been to weaken the greenback - and trigger an unravelling of the gigantic US dollar carry trade.
But a further rise in the US jobless rate will spell bad news for US banks which are looking forward to an end to the job losses to ease the pressure on their non-performing loans, as people become better able to pay their mortgages and credit-card bills.
Put simply, global equities markets find themselves caught between a rock and a hard place as they wait for the dust thrown up by current uncertainty to settle in the weeks or even months ahead.
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