The market players are presently fearing the situation of global slowdown which could lead to a recession. This situation has been seen because of the several factors which include the trade war between the US and China, a downturn in the financial markets as well as other macroeconomic measures. In order to tackle the current situation of the stock markets, the investors need to carefully analyze the factors which have been contributing the fall in the markets and need to wait for some stability in those factors.
The market players also need to have a look at the global macro-economic parameters which, in one way or the other, have the potential to affect the stock markets. The global market participants need to closely track the decisions as well as comments of the Federal Reserve as these comments largely determine the future movement of the broader equity markets.
Another factor which the investors need to take into the consideration is of the earnings season. Soon the US companies would start reporting their earnings which might also be the primary factor deciding the movement of the stock markets. The important factor which the market players need to see in the earnings report of the companies is the outlook related to the expected numbers which the companies might be providing. Most of the global companies might state the impact of the expectations of the global downturn on the expected performance of the company. Therefore, the global market participants need to have a close look at the earnings of the companies. It can be assumed that the healthy earnings season might support the performance of the broader markets. While the investors are tracking the financial markets, they also need to maintain their focus towards the oil markets as well. It can be said that the downturn in the financial markets might also put some downward pressure on oil prices. This happens primarily because with the fall in the financial markets, the worries about the downturn in the global economy increases which might impact the demand of oil. Thus, the worries of the weaker demand pull the oil prices down.
According to the December 2018 meeting of the Federal Reserve, the investors are assuming that the Fed would raise the rates two times in 2019 which reflects a fall from the earlier expectations of three rate hikes. However, the market players were expecting that the central bank of the United States would hint about raising the rates even slower than this in 2019. Therefore, the investors need to closely analyze the factors which might decide the future movements of the markets before taking any call. The unsettling of the global trade environment has also been the primary factor which has been disrupting the investors’ confidence. These types of geopolitical worries largely impact the business as well as consumer confidence. A fall in the consumer confidence might lead to a decline in the spending by them.
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