Heightened instability in the Middle East drove up the Chicago Board Options Exchange (CBOE) volatility index yesterday, as investors scrambled for less risky assets to ride out the turmoil.
As a result, stocks suffered their biggest one-day loss in nearly six months.
The Vix – often dubbed the fear index or the fear gauge measure – attempts to measure the volatility of S&P 500 stocks over a 30-day period. It settled up 24.1 per cent at 20.04. The percentage gain was the largest since 20 May last year.
US treasuries prices and the dollar – assets considered safe compared to stocks – rallied as a result.
Thomas Nyheim, portfolio manager for Christiana Bank & Trust said: “The market hates uncertainties, especially geopolitical ones, and based on how that shapes up throughout the weekend, next week’s trading will be impacted”.
Crude futures rose 4.4 per cent to $89.43 (£55.78) a barrel as the protests in Egypt threatened Middle East stability.