Financial markets have been on a bumpy ride recently. The VIX, a widely-used measure of market volatility, has rocketed up nearly 30 percent in a month. Part of what’s moving traders is uncertainty about the Fed’s next moves. But a number of key factors around the world have investors bracing for more sharp peaks and deep valleys.
A quick spin of the globe reveals why, starting in Japan. Stocks have exploded there recently. Until Thursday, that is, when they dramatically flamed out. (They recovered some of the losses in trading Friday.)
“That was simply running faster than the markets really ought to have done, so some sort of correction was probable,” explains economist Andrew Hilton, director of the Centre for the Study of Financial Innovation in London.
Elsewhere on Earth, Europe’s economy is still shaky. That has investors doubting the crisis there has passed.
“The closer they look, the more they realize that it isn’t over,” Hilton adds.
So that’s life in the developed world. Keep whirling that globe and emerging markets large and small come in to view. Investors are dumping these riskier investments for safer bets in America. It all adds up to a market that swings hard, up and down.
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