What’s Behind the Shaky Start for Stock Markets in 2016?

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Markets are beginning the new year with results that are very disconcerting for many long-term investors, fund managers, and day traders. Numerous factors have contributed to falling market values that have triggered rigorous sell-offs by many shareholders.

Chinese markets have been leading the way down with a pattern of slowing growth and economic woes. The Shanghai Composite Index has lost nearly 15% for the year to date, experiencing its worst finish in months. China’s central bank took moves to strengthen the yuan after prior weeks’ performance spurred global selling.

With China’s faltering economy demand for commodities from oil to metals plummeted further dropping prices of those market segments on global markets. Gold is the bright spot in commodities markets with a year-to-date increase in the 4% range.

Other economies in the region fared not much better, with Australia losing 1.2% in the S&P/ASX and the South Korean Kospi reacting with losses at the same level.

Investors have had plenty of performance issues to be concerned with so far this year, including global economic woes, Middle East political tensions, and the continuing over-supply of oil from both Middle East and US domestic production.

Reports of sluggish corporate growth and rising interest rates have fueled additional concerns in  investor attitudes.

Will the Shaky Start Persist?

On the positive side China’s attempts to bolster market and currency values appear to be having at least some level of success, with reports of improving GDP growth at 6.9% that could bring China back to bear market territory. Japan is similarly realizing bear trends that add to rising prospects in those markets.

Past experience has demonstrated that even when markets appear dismal at the year’s start recovery can optimistically be anticipated for the year overall. Even after the considerable drop in values in August of 2015 the markets bounced back due to strong economic results in the US and China’s stabilization. This may prove to be a period of time where investors can take advantage of buying under-valued stocks at bargain prices.

The International Monetary Fund (IMF) regularly releases their World Economic Outlook (WEO) which currently predicts a global growth rate of 3.4% for 2016, which is hardly a phenomenal rate of growth, but certainly better than losing ground. By comparison their estimate for 2015 was a rate of only 2.6%.

How Do You React to the Shaky Start?

Global markets and economic conditions will historically recover and return to positive levels. Timing is the question, as with many investments. Day traders are of course more sensitive to timing considerations for confidence in executing trade orders to maximize profits.

Analytical tools, trend monitoring, and close attention to global current events will play a significant role in investment success.

SureTrader is a leading online broker with tools and news sources for accurate analysis and lightning-fast trade execution. SureTrader provides friendly and courteous support available to our clients on a 24×7 basis to answer any questions and resolve problems.

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Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.

 

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