According to the IMF, both the United States and China would feel the implications of the tit-for-tat tariff war between the two economic superpowers starting next year. Furthermore, rising interest rates will also divert investment capital from emerging markets, causing further pain abroad.
The IMF is currently conducting its annual meetings in Bali, Indonesia, which will likely include discussions regarding trade wars and the Federal Reserve’s tightening monetary policy. The IMF’s global growth outlook comes as U.S. equities have been feeling downward pressure as of late with rising Treasury yields dominating the financial news.
Rest assured, yesterday’s 800-point loss in the Dow will also be a likely topic of discussion.
“This major sell-off would not have taken most investors by total surprise,” said Nigel Green, CEO and founder of deVere Group. “With rising interest rates, a contracting labor market and rising oil prices, this readjustment was all to be, to some degree, only a matter of time. Other triggers included the rising bond prices, escalating trade tensions between the world’s two biggest economies and concerns about valuations as we head in to earnings season.”
Even with the latest Yardeni Research data showing the U.S. as head and shoulders above the rest of the world, Green recommends that investors still diversify across the globe, especially if the sell-off continues and other parts of the globe slowly get back into positive market territory.
“This latest sharp global sell-off should serve as a timely reminder for investors to ensure that their portfolios are properly diversified across assets, sectors and geographical regions,” said Green.
For more market trends, visit ETFTrends.com