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Expert: there are two extremes observed in financial markets

Anželika Dobrovoļska/linkedin.com.
There are two extremes currently observed – on one hand, there are very positive economic trends observed around the world, but on the other hand, there is also the continued growth of interest rates accompanied by nervousness among investors, says Luminor Deposit Advisory Office manager in Baltic States Anželika Dobrovoļska.

«This means investors should be prepared for more significant fluctuations on different markets and remain vigilant to be able to use the opportunities offered by said markets,» said Dobrovoļska.

The expert mentions: «As expected, 2018 has brought greater fluctuations to financial markets. February was the first month after a 15-month-long uninterrupted period of growth, when global shares experienced decline. Nevertheless, positive outlooks in regards to development of the global economy and the general level of optimism on different markets only served to motivate investors to use price decline to procure assets.»

At the same time, she mentions that the main cause for fluctuations was the fears of investors in regards to the interest rate rise in USA. The new president of the US Federal Reserve System J. Powel was brave in his first speech, reporting that interest rates in USA could be raised three or more times this year. Nevertheless, investors’ concerns are largely unjustified, because rates in USA remain historically. Even if interest rates increase three more times, it will increase the current rate by 2%, which is still 1% below the average historic increase.

«Of course, after a lengthy positive situation on stock markets and low fluctuations experienced in February may seem like an emergency. In reality, however, recorded fluctuations are very far from the changes experienced during crises and period of correction. For example, S&P 500 index’s average daily fluctuation level was 2.2% in 2011. In February 2018 the level was 1.3%,» says Luminor Deposit Advisory Office manager.


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