Recently, the stock market has been a beehive of activities as investors jump ship to save money. This is coming as the prices of oil and Bitcoin nosedived greatly. Speculations are rife about the future of the market following these series of events.
Some experts believe the worst is yet to come as instability and hasty decisions continue to dominate both markets – cryptocurrency and oil.
The market witnessed some of its biggest dips as several assets suffered a change in fortune. Bitcoin, for instance, plunged to its lowest in a single year this week, while the price of Brent crude witnessed its worse slump the same week.
Investors might be taking critical positions in the highly volatile stock market, and price cascades haven’t helped, but financial experts don’t think these are signs of a more negative market outlook in the coming future.
For many investors, 2018 will be one year they would never want to remember with the ‘bearish’ market ranging on. Analysts are of the view that the recent crash in prices should change in the coming year.
Financial experts at the Bank of America are of the opinion that there are much stronger red flags – instability in foreign exchange, bond, equity and rash sale of stocks – that could provoke rapid monetary transactions which could spell doom the sectors and the economies concerned.
According to analysts, this year marks the first time in 25 years that bonds and stocks have taken the back seat while cash is turning out to be the star of the show. However, $24 billion went into bonds, $35 gained entry into the money market and equities recorded the greatest input of about $122 billion.
Data from the Emerging Portfolio Fund Research (EPFR) has shown that bonds suffered a deficit of $5.2 billion and equity witnessed an inflow of about $4.6 billion only just this week.
$2.3 billion was withdrawn from the high-yield bonds while the investment grade corporate bond witnessed a hemorrhage of $2 billion making corporate bonds one of the biggest hit.
While the US dollar has stayed standing with an increase of 5% from the previous year, and the high-yield credit remained afloat, experts appear to be skeptical nonetheless.
Financial analysts at the Bank of America agree that the US dollar and the high-yield corporate bonds are perhaps the only positives. However, they opine that the US dollar will gain more ground in the coming year.
The United States isn’t the only country witnessing a downturn of events. The European continent has been equally hit as the European equity funds lost $1.3 billion this year.
According to Reuters, about $2.6 billion went into United States equities renowned for their potential and standing.
Frankly, there’s a yearning for the stocks of budding markets and a $1.2 billion inflow, one of many in the last few weeks, buttresses the claim.
In all these, one thing is clear; the financial sector is going through a difficult phase. How the year ends will depend greatly on the confidence of investors regarding the outlook of the market.