On Friday US stock indexes ended the week with their worst performance since June 2016 after the Dow Jones industrial average futures declined more than 200 points, S&P 500 dropped by nine points and Nasdaq 100 futures saw 37.75 points fall.
There are concerns the stock market’s performance could indicate the US is set for its first recession since 2008 and a knock-on effect could cause an economic downturn across the globe.
Jason Draho, head of tactical asset allocation for the Americas at UBS, described the “growing pains” in the market to be at fault for the low performance.
He said: “Markets are likely to remain choppy as they adapt to this new growth and interest rate environment.”
In another warning, the global economy could be about to suffer a setback economist Allison Schrager explained Americans’ lack of money in savings could indicate overconfidence in the market.
She said: “The economy may be booming now but there are plenty of reasons to be skeptical it will last.
“Productivity numbers don’t justify the headline growth figures.
“Many people think the stock market is overvalued and due for a correctio
“It has been eight and a half years since the last recession and the natural oscillation of the business cycle suggest we may be due for another one soon.”
Joachim Fels, from Pimco, has also previously warned a lack of fear in markets means investors should be worried about another stock market crash.
Speaking in January he said: “The fact that the fear is gone is the main reason why we should be worried.
“That means most investors are now pretty fully invested and that means they will want to get out if the markets start to correct – exacerbating the downdraft.”
Any financial crash caused by the collapse of the US stock market would likely have a massive knock-on effect in Britain with growth slowing in recent months as investors opt-out of placing money in the UK until they know the final Brexit deal.
Figures from the Insolvency Service also reveal that in 2017 the number of people who declared themselves bankrupt reached it highest level since the financial crisis.
Last year 99,196 people went bankrupt in the UK, an almost 10 per cent rise on 2016.
At the same time accountancy firm, KPMG’s Growth Promise Indicator highlights the UK has dropped to the 13th fastest growing economy in the world because companies are unsure of Britain’s plan after it leaves the EU.
Meanwhile, the Office for Budget Responsibility has declared it overstated the UK’s economic performance over the past seven years, meaning the British economy is weaker than previously thought.
Speaking in Davos a fortnight ago Barclays Chief Executive Jes Staley gave a stark warning that the world is unprepared to deal with the next global financial crisis.
He said the current situation is “a little like 2006 where we all think we have solved the riddle of economic crises”.
Also speaking in Davos the Professor of Public Policy and Professor of Economics at Harvard University, Kenneth Rogoff, said: “If we have another financial crisis, there isn’t even a plan A.”
This Article Was Originally From *This Site*
Powered by WPeMatico