FMB Techincal Briefing - October Market Turbulence

By FMB on 

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Despite today’s recovery, stock markets are heading for their worst week since February, Reuters points out.

After hearing a few of our fund managers here at FMB recently, we have been warned that value and growth will be hard to find in the next twelve months. A trend of rising in oil prices, Chinese slow down and trade wars were all cited. One thing that seemed a given was how the well the US economy was doing. So what has happened this week as the US Dow Jones Industrial Average took a 830-point drop on Wednesday with Asian and European stocks following yesterday?

Correction?

When markets are rising, we usually see a slow pace but falls tend to be much more sudden as has happened this last week. There has been significant recovery but overall this will not be a good week for the global economy.

This week so far, US and Chinese shares are among the worst performers, a possible sign of investor worries about the trade war.

Trade wars, rising interest rates and slowing growth have been cited as reasons for the slow down but in reality is this a correction of market valuations as some big companies are set to report this week?

After a long bull run in the US, investors have been waiting for the moment to sell and energy companies were the first to be hit as oil prices fell into steep decline. Concerns about interest rate rises from the Fed caused a sell off of firms with exposure to higher rates as well. With lots of companies due to report their figures in the next few weeks, these two factors are expected to have an impact on profits.

What does this mean for investors?

As mentioned earlier, it will be a tough road ahead, although ironically the pound rallied today as did oil prices. One thing is for sure we believe our approach of actively managed funds selected to match your appetite for risk is the best long term approach for our clients, most of whom have a relatively long time horizon to invest and a conservative approach to risk. There are always peaks and troughs along the way, but that’s the nature of the beast. What matters is your financial plan and whether you are still on track to achieve your goals.

Read the latest from Reuters here

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