How will the stock markets around the world fair in the short to medium term?
The performance of worldwide stock markets has been very mixed to say the least over the last few weeks and while there has been a slight recovery after recent falls there is still much nervousness amongst investors. However, as UK base rates continue to fall, as do many others around the world, there is a feeling that more and more investors will be looking towards the stock market for the first signs of recovery because bank deposits are earning very little interest. In a rather bizarre way, falling UK interest rates could actually see a significant switch of funds into the stock market and other connected investments.
However, that said there is no doubt that stock markets around the world are on red alert for bad news and bad signs regarding the worldwide economy. While in the good times investors discounted many bad news stories and concentrate on the good news, this has turned full circle with investors now obsessed with bad news and ignoring any possible signs of short-term recovery. Thankfully, as and when they recovery does materialise there will be sufficient funds on the sidelines to make a difference and we could see a significant bounce. When this may be and what may prompt this is very much open to debate.
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