Stock Market Volatility and Alternative Strategies 

Politicians and media have warned about the stock market drop in the last few weeks. The upward movement in gold and Bitcoin is assumed to signify the same, while there are other reasons for upward trends in safe havens, like the Fed interest rate change, the G20 meeting, and the trade clash between the US and China. 

In the worst case, some analysts assume the index may drop by almost 50 per cent from the previous highs, and some believe the crash may have a long-term impact. 

There are many possibilities where investors and analysts are formulating extreme predictions as they want the investors to be prepared for such movements in stock markets and carefully invest during the time. 

Barclay said three factors could hit the market – the trade terms, 

• Federal Reserve rate cuts and economic slowdown. 

• The markets may ease and not convert into a full recession, 

• creating a momentum shift for the investors or symbolising a late-stage bull market. 

• Amidst such predictions, the markets have been gaining new highs where the S&P 500 was at one of its best since last year.

• There are signs that the Fed may remain aggressive in its plans to cut, irrespective of market changes and trade issues, and there are hopes of a truce between - Trump and Xi Jinping.  

• The truce may be initiated as the US elections are near and the markets need support.  

• Globally, investors are waiting for the G20 meeting, where the US is willing to withdraw the additional $300 billion in Chinese duties. 

• The G20 may not provide the platform to reinstall the previous trade deals ultimately, but it may encourage discussions on the issue.

• China faced a decline in early trade, where Shanghai slipped 0.43 per cent in June last week. 

• The 10-year US Treasuries declined 120 basis points since November. 

• The speed at which the dollar is falling also creates tensions as it stands at a 3-month low of 95.980.  

Gold surged to 6-year highs in the last week, reinstalling the haven facet, reaching $1420 an ounce. Gold has been gaining and now is at 12 per cent up since May to $1,426.39 an ounce, and oil consolidated as the tensions between Iran and the US erupted over the drone strike. Brent futures were up 8 cents to $64.94. 

Asian stocks remained low on Wednesday over the Wall Street sell-off, and the market almost cooled over the lowering of Fed rates. China’s listed bank shares were down over the concerns related to small farm loans. 

The yen continued to trade at 107.01 against the dollar, as it touched the lowest at 107.50 in the last week of June, even though it remains a haven currency option. 

Since the investors expect changes, they are encouraged to rebalance the portfolio to suit the new changes and sell some asset classes. However, the key to such volatility is holding an investment long-term, as many greens are available. Moreover, even the analysts cannot predict the exact low point during the crash.