Top Market Risks for 2018 all Traders Need to Know – Introduction
To a large extent, 2017 has been a good year for investors and traders. While low market volatility has had some impact on traders’ profits, it has generally been a good year. Globally, stock markets have done well with the United States and Germany stocks hitting an all-time high. At the same time, crude oil has seen some gains especially in the final quarter while commodities like Palladium, Nickel, and Copper have had substantial gains. In this article, I will highlight several market risks that all investors need to know.
First, Robert Mueller, the special counsel who is investigating the Trump campaign will be a major risk. As you already know, the main reason why the stocks are doing well is because of Trump, who has started repealing regulations and easing the tax system. If the Mueller probe shows to incriminate the president, the market could have significant declines. This was evidenced two weeks ago when the Dow fell by 350 points when ABC ran a fake story.
Second, North Korea will remain a major issue to investors. This year, the country has been successful in creating missiles that can reach all parts of USA. To respond, the US has issued major sanctions to the country. The increasing escalation could lead to significant risks to the market especially when there are indications of war.
Third, a surprise jump in inflation in the United States could pose a risk to the market. As you know, inflation has struggled to hit the target price set by the Fed. The inflation is currently under 2%. As more people are employed and as wages improve, it could spur inflation, especially in the second quarter. If the inflation crosses 2% and continues to rise, the implication is that more rate hikes would be put in place.
Fourth, Brexit will continue to dominate the markets in the new year. As you know, Britain has been negotiating favorable terms for the exit process. Investors will pay close attention to the negotiations which could have significant implications.
Fifth, the Israel-Pakistan issue could be significant. Last week, the United States recognized Jerusalem as the capital of Israel upsetting many observers and allies. Chaos have already started erupting in the Middle East. This could be a major issue for stock markets and oil markets globally.
Sixth, the Chinese debt presents a major risk that could unravel during the year. China has been ramping its debt to spur growth. As a result, the debt has grown to more than $10 trillion. Recently, Moody’s has issued a warning to the country. If the debt situation continues, chances are that the global markets could be impacted.
In addition, Bitcoin could present major risks for the market. This year, Bitcoin has gained by more than 1500%. Many believe that bitcoin will be a major currency accepted everywhere. Some are cautious. In fact, some believe that we could see a bitcoin crash in the coming year. Investors will pay close attention on what happens. In the past, I have advised people to buy one or a small portion of bitcoin and forget it.
Another risk is the midterm elections in the United States. These elections will be so important for the stock market. Presently, the republicans have a majority in both houses. If they lose the control of any house, it could be a major hindrance to Trump’s policies.
Also, the Fed will get a new chair. Yellen will leave in February and Powell will take part. While investors expect a similar policy, chances are that he could be different. Therefore, there is a need for being careful as the new chair takes the job.
Top Market Risks for 2018 all Traders Need to Know – Useful Tips:
- Discover more on CNBC;
- Another interesting reading on CCCapital.com;
- Click on Blackrock to find out more information on the matter.