Prediction vs. reality: Market crash in 2019? Not close so far

Most major stock markets are rallying this year despite trade tensions and other headwinds.

The author(s)

  • Rajeshni Naidu-Ghelani Public Affairs, Canada
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Online Security| Ipsos

 

As has been our tradition, we asked you to make some predictions at the start of the year -- focusing on the economy.

Overall, more than 21,000 people surveyed between December and January across 31 countries had a downbeat outlook for the economy when compared to the previous year.

So much so that more than a third (37%) said they expected major stock markets around the world to crash in 2019. That was up nine percentage points from 2018.

Now that we’re well past the half-way mark to the year, how are we doing on that score?

Other than some volatility here and there - with a recent big dip coming this past week - global markets have been rising this year.

While the economic data are mostly good, people
don’t see the improvement in their day to day lives
.”
Darrell Bricker, CEO Public Affairs

U.S. benchmark indexes – the Dow Jones Industrial, S&P 500 and Nasdaq Composite - have made double digits gains so far, up 11%, 17% and 18% respectively.

Following the U.S.’s lead, China’s Shanghai Composite is up 11%, while the rest of Asia is modestly higher with Hong Kong’s Hang Seng up 0.5%, and Japan’s Nikkei rising 3% this year. In Europe, London’s FTSE 100 up 7%.

‘Bracing’ for the worst?

Darrell Bricker, CEO of Public Affairs, said even though markets have been gaining momentum this year after the sell-off in the fourth quarter of 2018, people remain “jumpy since 2008” -- when the global financial crisis began.

“We’re bracing for something bad to happen,” said Bricker. “While the economic data are mostly good, people don’t see the improvement in their day to day lives.”

Looking back to how people felt about investments around the time they were surveyed, Nicolas Boyon, Senior VP of Public Affairs U.S., said the Global Investment Index tracked by Ipsos in December last year was at 42.7 points – 1.1 points lower than the same period a year earlier.

“It [the investment index] had been dropping slightly, but steadily in the fourth quarter of 2018,” said Boyon. “So, it only makes sense that people thought it would keep declining in 2019.”

It’s no surprise the investment index was declining in the last three months of last year, which was also a turbulent time for global markets that plunged in tandem with oil prices, and U.S. Treasuries.

What started as “red October” developed into wild swings in stock markets until December – with the MSCI World Index falling 14% in the quarter - marking the worst quarterly performance for global equities in seven years.

While this year is turning out to be a different story despite the ongoing trade war concerns, and interest rate cuts by global central banks to boost economic growth -- there’s still five months ahead to see how the fate of global markets unfold.

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The author(s)

  • Rajeshni Naidu-Ghelani Public Affairs, Canada

Society