“Markets can remain irrational longer than you can remain solvent.” – John Maynard Keynes
With the major stock market indices either ending in the red or merely edging into the green territory – in terms of their year-to-date performance – investors remain highly skeptical about where to invest for better returns. Indeed, the first quarter of 2016 remained largely volatile, somewhat unchanged from the picture witnessed last year.
Multiple staggering macroeconomic and socio-political factors like fluctuating oil prices and their consequent impact on commodity prices leading to volatility in commodity and energy sectors; employment growth in the U.S. leading to raised consumer spending; an appreciating dollar; weak overseas sales for U.S. companies; uncertainty around the Fed rate hike and the Middle-East economic crisis – all led to equity prices oscillating across the global map.
How’s the Stock Market Faring Now?
Looking forward, analysts, for now, expect no major overturn in the overall stock market scenario for the rest of 2016. However, this should not be a reason for investors to become overtly risk averse and stop investing in the stock market altogether.
In fact, if we take a look at China’s current situation, wherein the economy’s currency devaluation primarily kick started last year’s stock market crash; some stability looks to be in place. This is because even after ending the first quarter as the world’s worst-performing index, the Shanghai Composite index witnessed a meaningful rebound this March, indicating a receding volatility.
This definitely is a major thrust for those who have, for long, blamed China for the global downturn, to start looking at the investment world with renewed optimism. Moreover, the view of a few analysts at Deutsche Bank – that the U.S. job market will remain solid this year and will lead to a 12% surge in the S&P 500 by 2016-end – is encouraging.
