7th January 2016
A chaotic start to the year, but don’t panic!
Global equities began the year miserably, with the combination of a falling Chinese stock market, weakening Renminbi and the lowest oil price since 2004, contributing to a gloomy start to 2016. Volatility was mirrored in the US stock market, with the S&P 500 index suffering its worst start to a year since 2001. Spillovers from China and the US could have serious destabilising effects on the rest of the world, however, to panic this early on in the year would be premature, as much of the recent chaos has been a result of technicalities, including panic selling in China and careful tax planning in the US. Furthermore, a continuation of the better than expected performance in the eurozone helped by its low exposure to the energy sector, and strong employment and wage growth could prove very helpful at the global level.