Published on 9 August 2024
You may have wondered why the markets were so turbulent this week. Let’s take a closer look at what happened, why it happened, and most importantly, what it means for your equity investments.
What happened?
This week, the stock markets took quite a ride: On Monday, 5 August, the Swiss Performance Index (SPI) dropped up to 6%, and the German DAX index temporarily fell by 9%. Across the Atlantic, the US indices, S&P 500 and NASDAQ Composite, saw declines of 8% and 10% respectively.
The turbulence began in Japan, where the Nikkei index experienced a dramatic 13.4% drop – the biggest since Black Monday in 1987.
Fortunately, markets began stabilising over the next few days, recovering some of the losses. As of Thursday, 8 August, European and US markets had declined by only 1.2% on average compared to the end of previous week.
Why did it happen?
The main driver of these declines is the fear of a recession. Recent economic data from the US, China, and Europe indicated slower-than-expected growth:
- In the US, manufacturing growth slowed and jobless claims increased
- In China, key Purchasing Managers Indices (PMI) suggested reduced industrial activity
- In Europe, rising unemployment added to the concerns.
On top of that, escalating geopolitical tensions in the Middle East and Eastern Europe, along with concerns that central banks may delay lowering interest rates, have contributed to market uncertainty.
The quick recovery in the markets suggests that the initial drop may have been a cautious reaction by investors, which isn’t uncommon given the current uncertainties.
What does it mean for my Inyova portfolio?
Your Inyova portfolio moves with global equity markets, which means you might have noticed a decline at the beginning of the week. However, it’s important to remember that these ups and downs are often temporary. Your Inyova portfolio is well-diversified across regions, industries, and currencies: designed to handle volatility over the long term.
Market corrections are a normal part of healthy markets. Historically, markets have shown resilience and bounced back strongly after periods of decline. In the past, staying invested during these times has been key to capturing long-term growth. Many investors have found that such periods presented opportunities to invest at lower levels, potentially benefiting from future market recoveries.
Reach out for support
We’re here to help you navigate these turbulent times with confidence! If you have any questions about your portfolio, our Customer Success team is happy to help you. You can email us at [email protected] or call 044 271 50 00.
Sources: LSEG Workspace, Bloomberg
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