Belevics: Long-term financial markets trends still positive

“The year 2018 has started with a euphoria phase in financial markets and the stock indexes in the world’s biggest stock exchanges reaching new maximums. However, the beginning of February was not favourable for investors at all, as the prices of stocks experienced the biggest global correction during the last years”, reminds Luminor economic expert Gints Belevics.

Although such fluctuations might seem extraordinary after such a long period of silence, it should rather be assessed as a usual adjustment that follows after a significant increase of prices and the long-term tendencies in markets still are rather positive.

If we look at the experienced increase, it is clear that nowadays, when most of the stock trading is performed by algorithms, one decrease in price may cause additional wave for selling shares even without any fundamental reason. This, in its turn, causes the next selling wave, which concerns investors, who wish to decrease their risks. Thus the fall in prices is affecting not only company shares worldwide, but also the prices of oil and other risky assets. Furthermore, additional demand is observed for assets considered as a shelter for investors during hard times - for instance, Switzerland franc and Japanese yen, thus facilitating the increase of the value of both of these currencies.

More information on current trends in Luminor financial market review: February 2018.

In general, the basic indices of the companies are good, especially in USA. The majority of companies will submit their reports for the fourth quarter in the nearest future and for the time being there are no signs of any negative surprises. While the exchange of money in the market is sufficient, this money most likely will be invested for some return in stock market and other risky assets market. However, the concerns about the rapid interest rate growth in USA and Eurozone might make the investors more careful. The head of the Central Bank of England also announced that the rise of interest rates will most likely start sooner and will be more rapid than expected.

For media contacts: Lita Juberte-Krumina