Sell-offs could be down to machines that control 80% of the US stock market, fund manager says

De Blonay’s comments come after U.S. stocks fell sharply on Tuesday, on the back of concerns regarding the bond market.

Some analysts believe that the sell-off was triggered because of the way the complex machines operate. They are programed to sell when the odds of future market losses increase.

On Tuesday, U.S. short-term interest rates traded above long-term ones and, as a result, the setup of the algorithms could have translated that data as a selling point, leading to a general sell-off.

In February, when stock markets also saw a massive sell-off, a strategist told CNBC that the algo trading had sparked that overreaction.

Salman Ahmed, chief investment strategist at Lombard Odier, said: “The rise of algorithm-based trading means that there are in these algorithms some levels which trigger sell-off, i.e. sell orders.

“Yes, I can argue that we needed some kind of correction, given what has happened over the last few months. But the ferociousness of the intra-day sell-off is driven by these pre-set sell orders, which come programed in these algorithms automatically.”

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