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ECONOMY: Global recession fears cause markets downturn

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ECONOMY: Global recession fears cause widespread markets downturn
By: Iain Fraser – Consultant Editor
City of London Newsroom

Global stock markets fell around the world as concerns grew about a possible recessions in major economies. This coupled with the US-China tariff saga, weak data from Germany and China and the likely prospect of a “no deal” Brexit is generating doesn’t bode well when viewing an overall snapshot of the worlds GeoPolitical risks which also now have to take the individual Hong Kong and Kashmir crises into account. The collective risks have prompted investors to dump equities in turn
fueling a rush for so called “safe harbour assets” like bonds and gold.

The three main US stock markets closed 3% lower overnight, with European stocks falling across the board, prompting the Asian markets to open lower, meanwhile, the CBOE volatility index, the so-called “fear index” jumped higher with spot gold prices rising.

The US central bank also came under renewed pressure from US President Donald Trump who yesterday [14 August 2019] attempted to deflect market turmoil by blaming the US Federal Reserve and its somewhat erratic interest rate policy, calling Fed chief Jerome Powell “clueless” for not doing enough to support the internal US economy.

Trump said that in raising interest rates four times last year “the Federal Reserve acted far too quickly, and now is very, very late” in cutting borrowing costs, taking to his infamous twitter feed to post “Too bad, so much to gain on the upside!”

However, there are grave concerns that renewed attacks by Mr Trump on the Federal Reserve could have a negative effect by eroding investor confidence on its long-term ability to remain an autonomous body.


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