World Latest News
Analysts at Royal Bank of Scotland say that investors should sell everything before the real stock market crash happens. RBS is sure of a poor year with shares and oil slumping. It advises clients to shift to safety of bonds.
World stock markets should come under severe pressure in 2016, with some predictng the FTSE 100 to be down more than 15%. Investors, in general, face a catastrophic year with stock markets falling by more than 20%. It is predicted that oil will continue its downward trend an it may slump to $16 per barrel, economists have warned.
We are warned to cash in everything except for bonds of very high quality. This matter is about return of capital, and not the return on capital by any means. Current situation is reminiscent of 2008 in many ways. It is then when the crash of the Lehman Brothers led to the global meltdown. This time around, it seems, China is the crisis point.
World Latest News: World stock markets
World stock markets have been under pressure in early 2016. The FTSE 100 is down more than 5%. It is its worst start in 15 years. The Dow Jones has made its poorest ever start to a year by falling by the hour.
Oil prices have been falling sharply on fears of poor demand and oversupply, taking note of Iran, which is due to start exporting once again after the end of sanctions. Tensions between neighboring Iran and Saudia Arabia make it hard to predict whether OPEC should agree to cut production in order to halt falling prices. Brent crude is at $31, its lowest level since in 12 years.
The majority of investors are spooked by severe slowdown in the Chinese economy. The fall in the value of Chinese currency, does not help the country’s stock market in spite of attempts by the authorities to limit selling. China is in the middle of a major correction and it is going to unravel even further. Credit has become extremely dangerous.
World stock markets levels have been supported for too long by low interest rates, stimuli from central banks, not excluding European quantitative easing, and high hopes of an economic recovery. European and US markets may fall by even further 10% to 20%, with a major risk being placed on the FTSE 100 due to the predominance of commodity companies. For this reason the UK is particularly vulnerable to a such shock.
World Latest News: Predictions
Finally, we believe that 2016 will be characterized by focus on the exit from the ongoing crisis. The main asset classes that mostly benefited from quantitative easing are, of course, the emerging markets.
This is voiced not only by some, but by the analysts from RBS, JP Morgan advise clients to sell their holding in stocks on any minor bounce back.
Morgan Stanley stated that oil prices should fall to $20 a barrel. Standard Chartered predicted a bigger slide to $10. Prices are being moved entirely by fluctuations in other asset prices, including the US dollar and equity markets. It is plausible that the prices could fall to $10, before investors concede that matters had gone too far.”