Should investors still buy the dips?
2nd July 2018 11:08
by Rebecca O'Keeffe from interactive investor
Equity markets are under significant pressure in early trading as the global trade war is expected to come into clearer focus this month.
In Europe, various leaders face acute political pressures of their own, with Angela Merkel struggling over immigration concerns and Theresa May facing another perilous month of Brexit negotiations.
Previously, investors have used significant market falls as a chance to buy the dips, however, with all these headwinds, it is difficult to view current market weakness as a buying opportunity.
After spending weeks not fully pricing in the downside risks, as investors hoped that there would be a last-minute reprieve rather than a global trade war, investors are waking up to the potential reality of a trade war and what that means for the wider markets.
Source: interactive investor Past performance is not a guide to future performance
Falling Chinese exports will subdue the commodity markets, individual tariffs will markedly affect sectors and their wider supply chain, and the prospect of a downward spiral is very real.
After largely surviving the pressure during the first half of the year with markets broadly unchanged, investors may find that the second half of the year, including the unpredictable summer months, may prove even more volatile than usual, delivering some opportunities, but increasing the threats for investors.
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