What is Causing Market Volatility?

In this world of weak growth, extremely low bond yields and coercive central bank policies, Brexit is only one of many forces contributing to ongoing volatility, says Hermes

Hermes 26 July, 2016 | 2:32PM
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The dire predictions about the fate of global markets if the UK voted to leave the European Union remain to be fulfilled. Markets fell in the immediate aftermath of the vote for Brexit, especially sterling, but the anticipated collapse of equities has failed to materialise. The pan-European indices have declined by a mere 1% in euro terms, and, even at their worst, none of the major markets sank below their February lows.

Brexit, as pivotal as it is, is only one of many influential risks in the global economy

In fact, the S&P 500 hit a new all-time high. Even UK mid-caps are down only 0.7% from their pre-referendum level, despite being in the direct path of a possible UK recession amid the uncertainty caused by the momentous decision. An even more startling metric is that since the close of business on 23 June, when Britons cast their votes, the MSCI World Index has risen by over 14% in sterling terms – an all-time high. Armageddon appears to have been postponed.

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About Author

Hermes  Hermes is a multi-asset fund manager offering global institutional and pension fund clients access to a broad range of specialist, high conviction investment teams.