Market turmoil – choose your own adventure
Markets are in turmoil. But why?
The answer depends on which adventure you want to follow. There is a raft of options being thrown around as we try to get our heads around what is causing the selloff. Some of the explanations include:
- OPEC’s inability to cut oil output;
- Sovereign wealth funds selling equities;
- The selloff in Chinese equities;
- Fears of a global recession;
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 17 Feb 16
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Markets are in turmoil. But why?
The answer depends on which adventure you want to follow. There is a raft of options being thrown around as we try to get our heads around what is causing the selloff. Some of the explanations include:- OPEC’s inability to cut oil output;
- Sovereign wealth funds selling equities;
- The selloff in Chinese equities;
- Fears of a global recession;
Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
The answer depends on which adventure you want to follow. There is a raft of options being thrown around as we try to get our heads around what is causing the selloff. Some of the explanations include:
- OPEC’s inability to cut oil output;
- Sovereign wealth funds selling equities;
- The selloff in Chinese equities;
- Fears of a global recession;
Just to name a fewIn reality, the selloff is probably being caused by a combination of many things including a lack of liquidity in the market.
Interestingly, the slump in equity prices seems to be largely detached from economic reality. Although there remains the possibility that the turmoil will drag down economic activity, recent economic numbers are not pointing to a recession.
Before Central Banks, and then Banks in general dominated the headlines, it was the rout in commodity prices that had people’s attention. But reassuringly, there has been relative stability in the prices of commodities during the last few weeks.
With demand for safe-haven assets is up, precious metals have surged.
Industrial metals have also held up well and the price of Brent crude is still above its January lows, despite slipping back recently.
Recent strength in the Japanese Yen has also sent vibrations through the Japanese stock market amid fears it will erode corporate profit growth and derail the government’s efforts to fight deflation.
The surge in the Yen has raised expectations the Bank of Japan will take action to weaken the currency.
The Yen will likely remain strong while market turmoil continues; and any further strength in the Yen will contribute to volatility. We do, however, expect the Yen to weaken of its own accord as safe-haven flows reverse.