A slew of geopolitical events over the last 12 months has meant the environment for investing has deteriorated notably since last year.Speaking at the World Economic Forum (WEF) in Davos, Martin Gilbert gave the U.S.-China trade conflict and the Brexit impasse as two examples of how market sentiment has been impacted.
Since the last event in Davos, the U.S. has put tariffs on $250 billion in Chinese goods with Beijing responding with tariffs on $110 billion in U.S. goods — targeting politically important industries such as agriculture. Stock markets saw hefty falls at the end of 2018, accentuated by fears over the conflict and how it could affect global growth. Indeed, many indexes saw sharp corrections with some even entering official bear market territory.
“(There’s) a lot of geopolitical risk between the U.S. and China — certainly we are in a worse place than we were a year ago,” Gilbert said in Switzerland.He warned that the global economy could face even more headwinds this year which could lead further fluctuations in the markets.
“Even though the economists say global growth will be OK next year, the stock markets are telling us something completely different,” he said.”They are usually a very good forward-looking indicator and they are saying there is a bit of trouble ahead.”
Trader Georgi Bozhidarov