By the end of 2017, both escalating stock prices and growth in the digital currency market cap made the headlines. The global economic growth rate indicated a steady rise and the emerging market currencies recorded their highest gains in eight years, on account of a weaker US Dollar. Brexit was on everyone’s minds, as were the elections in countries like the US, Russia, Brazil, and Mexico.
Now, as 2018 draws to a close, it is time once again to look back and see how the global markets fared this year. It was a year full of surprises. Here are five major market movements that had far-reaching repercussions in 2018.
1. US Dollar Weakness Led to Robust Growth for Multiple Sectors
Although the US economic momentum remained strong, a tighter economic policy by the Fed led to a weaker US Dollar, which benefitted many industries. The FTSE All-Share index fell 1.9% in January 2018, on account of the rising Pound Sterling against the Dollar. The Japanese yen strengthened against the USD too. Other markets that rose include the Russian energy sector and the emerging market equities.
2. Global Sell-Offs Triggered Major Plunge in Stock Prices
Panic sell-offs triggered a significant decline in the stock markets across the world in February 2018. The US Fed raising the interest rates led to the Dow Jones Industrial Average plummeting 1,500 points, its most significant decline ever in its 122-year history. The pan-European Euro Stoxx 600 fell, suffering a six-month low. Japan’s Nikkei 225 was down almost 5%.
3. US Decision to Impose Tariffs on Chinese Imports and Withdrawal from Iran Nuclear Deal Caused Major Global Repercussions
The Trump administration decided to impose tariffs on some countries, including China, Mexico, and Canada, leading to a change in market momentum. Withdrawal from the Iran nuclear deal led to a sharp rise in global crude oil prices. Oil prices were also affected by rising global demand and supply discipline. But, perhaps the major brunt was taken by the emerging markets. A 10% tariff on $200 billion worth of Chinese imports led to a declining MSCI Emerging Markets Index, which was already suffering in Q2 2018. An increase in US interest rates led to the devaluation of many currencies, like the Turkish Lira, which has fallen 48% against the US dollar in 2018.
4. Increasing Likelihood of No-Brexit Deal Affects the UK Economy
Around September 2018, it became increasingly clear that the UK might have to sever ties with the EU in March 2019 with a no-deal Brexit agreement. The FTSE All-Share fell 0.8%, and the GBP weakened against the US dollar. The strengthening of the USD continues to affect the emerging markets, with a major blow to Chinese equities. US interest rates were hiked for the third consecutive time in 2018.
5. The Cryptocurrency Market Crashes Big Time
November 2018 will be remembered as the month of the greatest crypto market crash. Bitcoin’s price fell 37%, and the crypto market cap declined by $70 billion. Experts believe that this crash was a result of the delay by the US SEC in regulating Bitcoin futures, along with a messy fork in the Bitcoin Cash network.
These were some of the major market moving developments of 2018. As 2019 comes closer, all eyes are on the US-China trade relations. The Brexit chapter will also get increasingly gripping over the next few months. It’s a case of waiting to see how the global economy will be affected by all this.