Market update (08/24): Global Financial Markets adjust amid U.S. Recession Concerns
Global financial markets recently experienced declines due to concerns about a potential U.S. recession, triggered by a weaker-than-expected jobs report. Major stock indices and cryptocurrencies dropped, with Japan's Nikkei index seeing its largest decline since 1987. In this article you hear more about what happened, what it means for your investments and what Selma suggests to do next.
What happened on the financial market and how does it affect my portfolio?
Global financial markets took a hit in the last few days due to fears of a U.S. recession. Stocks worldwide and cryptocurrencies (in which Selma doesnāt invest) fell sharply, with Japan's Nikkei index seeing its biggest drop since 1987, erasing all its gains since the start of this year. This was triggered by a weaker-than-expected U.S. jobs report for July, which came out last Friday and worried many investors.
Many large US tech companies like Alphabet, Apple, Amazon, Nvidia and Tesla have come under pressure and have corrected from their recent highs.
However, Bond markets (especially government bonds) have benefited as interest rates have sharply decreased. Also the investments in gold have helped to stabilise portfolios.
What happens now?Ā
We expect that markets will keep reacting nervously to economic indicators and the interest rate decisions by the US. Central banks worldwide will continue to watch closely the recent market movements and might try to calm investors.
Will Selma make changes to my investments due to the recent market moves?
No ā the content of your investment portfolio is defined by your investor profile and how your money should be invested long-term to reflect your life situation best. Selma will not sell investments because markets are going lower but continue to focus on investing long-term.
Selmaās advice:Ā
- Remember that you should only invest money that you can keep invested for the long termĀ
- Use dips in the market to keep investing and lower your average purchase price (e.g. by investing monthly).Ā
- Your investments at Selma are broadly diversified. Diversification is very important as it helps to better balance risks. Keep investing diversified so youāre less dependent on single stocks or markets (e.g. the US Tech stocks).Ā Ā
If you want more information on the long-term approach to investing and what to do when markets are bumpy, have a look at our FAQs.
Sonja Egger
Sonja is a communication pro with background in Media and Intercultural Communication. She is here with the mission to keep your content varied, interesting and enjoyable. Outside of working hours Sonja is either swinging the paint brush or watching cat videos. šŗ
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