Chief Market Analyst David Jones provides a closer look at some of latest news impacting global markets. From drops in the stock markets to a gloomy IMF outlook, and an increasingly harder Brexit.
The stock markets
Investors are likely to be coming into this week somewhat nervous – and feeling a bit beaten up – after the volatility seen in stock markets last week. It was a torrid week for stock markets with major falls seen in the USA, Europe and Asia. Some of the leading technology stocks such as Facebook, Amazon and Netflix have been amongst the hardest hit companies.
There is a famous market saying: "bull markets climb a wall of worry" and this has definitely been the case this year.
The broader market strength has mostly been driven by a small collection of these technology stocks. Investors have become increasingly worried about these companies’ potentially stretched valuations. Those concerns have been greatly compounded by:
· rising inflation in the USA,
· the prospect of higher interest rates
· Head of the International Monetary Fund Christine Lagarde commenting that stock markets look expensive.
All this served to rattle investors over the past week. As is often the case when markets drop sharply, an element of panic sets in. This results in more selling and it becomes a self-feeding drop.