The year 2017 and the first half of 2018 saw unprecedented growth in the stock markets. We expect the same growth to continue in the future as well. But there are certain hindrances that have prevented the growth rate to increase and the issues are yet to be solved completely. Until now, we have been seeing that the assets are rising for the last one and a half years and volatility has become almost extinct. Political issues have played their part and we are seeing a growth in alternate form of paper currency, the digital currency. Everything is on the positive side of the frame but we cannot be assured of the same for the future, not yet.
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The first quarter of 2018 is saw some changes in the strategies that the countries follow. Like in the US, Donald Trump imposed some tariffs on Chinese imports, making the trade between them difficult. It also imposed ban on a major Chinese company, ZTE. Though the ban has recently been removed, the relations hasn’t changed much. This can be one of the key issues for the stock markets.
Rise of Cryptocurrency
Source : rsos.royalsocietypublishing.org
2017 and the first quarter of 2018 has seen a tremendous increase in the popularity of cryptocurrency with Bitcoin being their leader. By the end of 2017, the prices of many of these currencies touched new heights. But with the advent of 2018, the uphill journey took a hit. Their prices are considerably below their peaks achieved during 2017 but their existence cannot be ignored. With ETFs being introduced of such currencies, only time will tell where they are headed.
The US factor
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The biggest driver of the stock market is the US. Thankfully it going strong and is in a good space. The fear gauge or the VIX, of the wall street, which was at its maximum before the financial crisis in 2008 at 80, is now well hovering around 20. But seeing such trend makes it a point to judge if the investors are taking it for granted. It can be a major concern for the stock markets in the upcoming months.
Ageing Business Cycle
Source : bullmarkets.co
The business cycle is increasingly ageing and though we have seen growth for a long span of time, we all know that growth is followed by a dip. So the consumers must assess the stretch and the ability of the stock market to grow before investing in it. The risk of a fall looms large and there is a chance of financial overheating.
Stock markets will largely be dependent on growth of two superpowers, China and India. With India becoming the sixth largest economy in the world and the continuous improvement of China in terms of technology and relations, these two countries are expected to rule the fate of the stock markets. With all these developments and many other factors to consider, it is quite easy to conclude that the stock markets are heading towards a roller-coaster ride and it’s high time that the investors become careful and analyse the markets before investing a chunk of his saving into it.