Market Turbulence Returns

What You Need to Know

Global financial markets have been rocked by a resurgence of volatility, with significant losses hitting Japan and the U.S. on Monday, August 5th. The Nikkei 225 suffered a historic 12.4% drop, its worst single-day decline since 1987, and U.S. markets followed suit with sharp declines across major indices.

Key drivers behind this turmoil include disappointing forecasts from major U.S. tech companies like Alphabet, Apple, and ASML, which triggered a sell-off in ‘new economy stocks.’ Additionally, the Bank of Japan’s surprise interest rate hike caught traders off guard, leading to a stronger Yen and disrupting the carry trade—a strategy that had been widely used to profit from low Japanese interest rates.

As volatility surges to levels not seen since the COVID lockdowns, maintaining a strategic approach to asset allocation is more important than ever. Those focused on fixed income and bonds, particularly with duration exposure, have likely weathered this storm better than most, as bond yields have fallen globally.

Looking ahead, equity markets are expected to remain volatile, especially with the U.S. Presidential Elections on the horizon. Asset managers and stock brokers will be keeping a close watch on portfolios, ready to seize buying opportunities as they arise.

What do you need to do as a financial adviser?

Expect plenty of noise from clients and the market. In these uncertain times, it’s crucial to help your clients stay calm, and focus on long-term investment goals.

For more information on Sanlam Investments, Just Retirement, and Glacier - please reach out to your ICON Solutions Specialist.