Geopolitical Concerns Increase Stock Market Volatility

Economic considerations may take a back seat to geopolitics in coming months when it comes to market returns

Morningstar 21 September, 2017 | 3:18PM

The global economic outlook remains positive. The latest JP Morgan Global All-Industry Output Index shows a good pace of global economic activity: “Overall growth was the quickest since April 2015, underpinned by expansions across the six main categories of manufacturing and services covered by the survey. With new order inflows strengthening, backlogs rising and jobs growth accelerating, the economy looks set to perform well in the coming months.”

By sector, the index also showed that technology, and pharmaceuticals and biotechnology, in particular, are the fastest growing sectors, which shows that there is a fundamental underpinning for the sectors’ recent popularity with investors. Forecasters are also upbeat.

The Economist surveys a panel of international economic forecasters every month, and its September poll showed that every one of the 25 countries in the survey is expected to grow in 2018. The emerging markets are expected to be particularly strong, with India expected to grow by 7.5%, up from an already impressive 7% for this year, and China by 6.5%. The Economist also makes its own forecasts for countries outside the most important 25: every single one of them is expected to grow in 2018, other than grossly misgoverned Venezuela.

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