The week of the global market sell-off


The week of the global market sell-off

Wow. That escalated quickly. This week a major bout of volatility rocked markets with a worldwide sell-off prompting fears that the long bull run since the financial crisis might finally be over. However, it doesn’t look that way this time. Unlike sell-offs that have come before economic downturns, this week’s drama has been triggered by signs that the economy is doing too well. Better than expected employment and wage growth in the US have raised fears that interest rates might rise a little quicker than expected with the Bank of England delivering much the same message on Thursday.
 
For now, we’re seeing an injection of reality into markets rather than a doomsday scenario. Complacent investors are being forced to reconsider how much companies might make without free money. To make matters worse, ETFs structured to capitalise on low stock volatility have predictably fallen over. This might have added a little to the violence over the last few days. While there might not be an algorithm for common sense, most investors have avoided them

Read what the team at FE consider to be significant over the current week.