NEW YORK (TheStreet) -- Safe-haven assets were bid higher on Monday as investors remained cautious at the onset of earnings season.
Equities put together an exponential rally in the last half of 2013, as the economy improved and the Federal Reserve stayed committed to stimulus. The rally increased equity valuations, leading to the highest forward price-to-earnings ratio for the S&P 500 in the last seven years.
That was a sign investors were confident in the economy's health, but it also meant expectations were very high. Earnings need to justify the lofty valuations, and if earnings for the latest period underwhelm, investors may sell off on fears they are paying too much at current prices.
Earnings season is just beginning, but already negative pre-announcements have set a cautious tone. A weak payrolls number on Friday was digested by Asian markets early Monday morning. The CurrencyShares Japanese Yen Trust (FXY) and SPDR Gold Shares (GLD) were bid higher, when U.S. trading opened, U.S. equities tumbled alongside a spiking iPath S&P 500 VIX ST Futures ETN (VXX).
The overview of Monday's trading action shows a classic sell day. Anxiety overcame investors, and safe-haven assets caught a bid higher. The issue is whether the trend will continue. Daily charts of global equity indexes are technically weak and show room for a further downside move. Meanwhile, the yen looks to have bidders behind it, which could weigh on equities and commodities in the days to come.