Global Stock Markets Recover, But for How Long?

Zak Goldberg  |


Stock markets around the world have been making headlines in the last few days, especially the Dow Jones Industrial Average Index, which fell by 4.6%, its worst drop in six years. The US stock market was not alone, however, as European markets also suffered sharp losses, causing widespread concern amongst investors and throwing into question how long the rout may last.

Since the start of the week, many European markets have recovered, but the recent volatility will no doubt have investors around the world on edge. Here is some further information.

FTSE 100

In the UK, the FTSE 100 index rose by nearly 2%, signalling a fairly strong recovery, but still well below the all-time closing high seen earlier in January. Whilst this will be welcome news for most investors, it is fair to say that the index is not out of the woods yet, and it will take time to see just how damaging the recent rout has been.

That being said, financials performed fairly strongly during the recovery, given that they suffered the most during the stock market sell-off. HSBC, Prudential, Lloyds and Barclays were all amongst those to rise by up to 5.4%.

Asian Markets

The Asian stock markets were also hit heavily by the rout, but, like most other stock markets, have showed signs of recovery. That being said, investors and economists are divided as to whether the Asian stock markets are safe territory for investment just yet.

South Korea’s Kopsi and Japan’s Nikkei have both been fairly strong performers, as has Hong Kong’s Hang Seng index. It seems as though the Asian stock markets are fairly stable for now, but like the other markets around the world which were hit by the rout, only time will tell how strong the recovery will be.

Dow Jones

The American Dow Jones was one of the biggest sufferers of the rout, and has undergone some of the most severe volatility in recent days. Whilst it looked to be recovering after its historic slump, it then fell again, mainly due to fears over the rising Treasury yields.

With Donald Trump having boasted about the gains in the US stock markets before the crash, it may now take some time before full confidence is regained in the economy as a whole.

Uncertainty

With the VIX volatility index remaining high (although it has fallen since Monday), and other markets around the world still in a state of recovery, the mood amongst investors is still one of uncertainty.

Those who are inexperienced with global markets or investing in general might want to consider using a wealth management or financial adviser in order to minimise the chances of losing out to the current volatility and uncertainty of global markets.

The recent rout in global stock markets has shown just how unpredictable the markets can be, although it is fair to say that some investors will have seen this coming. It could well be the case that the highs for this year have already been reached, meaning the coming weeks could be an unsettling time for investors worldwide.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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