A market which is set to crash as the global economy is expected to contract again is in the midst of a run on shares, which are set to plunge by as much as 7 per cent as investors seek to save for the next big market downturn.
Market watchers say that the latest rout is being fuelled by investors’ fears of rising interest rates, the prospect of a sharp economic slowdown and the prospect that the Federal Reserve will hike rates in the coming months.
The plunge in the Australian stock market is also being driven by investors buying more bonds, which has caused some to sell their shares.
While the sell-off in the US stock market was also fuelled by the election of Donald Trump, it is likely that it will not have the same impact in Australia.
It is expected that the Australian market will continue to rally in coming months, as investors wait to see how the Federal Government responds to a sharp downturn in the economy.
In the UK, the share market is up 3 per cent in 2017.
There are also signs that the UK’s economy is stabilising, with the Office for National Statistics forecasting a recovery in gross domestic product in the next 12 months.
The UK has had a mild recovery, with unemployment at 6.5 per cent and growth of 2.6 per cent, which is slightly higher than the UK economy in the first quarter of 2018.
But the country has also suffered from a sharp fall in the value of sterling which has led to a fall in sales and an increase in prices, which have contributed to a slowdown in the country’s economic recovery.
A sharp fall has been blamed on a reduction in investment in the UK and a sharp rise in unemployment, as well as rising taxes.
Investors are also worried about the US Federal Reserve’s rate hike next month, which will have a devastating effect on the UK as it would see interest rates rise by up to 1 per cent.
Last year, the US and UK’s stock markets suffered a steep drop when the Federal Bureau of Investigation raided the offices of former US President Donald Trump’s personal lawyer and his daughter in an investigation into alleged ties between the Trump campaign and Russia.