2018 was not a positive year for stock markets around the globe. Stocks began the year trending upward, but then suffered a tough stretch of selling in the final months of the year as investors’ viewpoint of the global economy turned gloomy. The Stoxx Europe 600 lost 13% in 2018, while Britain’s FTSE 100 declined 13%, Japan’s Nikkei Stock Average dropped 12%, the Shanghai Composite finished down 25% (marking its biggest one-year decline since 2008), and Hong Kong’s Hang Seng dropped 14% (its worst yearly decline in 7 years). Further compounding the issue is the fact that various metrics indicate that the economies in Europe and China are decelerating as 2019 approaches.
U.S. markets fared slightly better than other major global markets but were still down markedly for the year. The Dow Industrial decreased 5.6%, the S&P 500 fell 6.2%, and the Nasdaq was off 3.9%. The outlook for U.S. markets in 2019 is quite uncertain based on a host of unresolved issues, such as the prolonged government shutdown, the continued trade dispute with China, and the Federal Reserve’s opaque plans for interest rate increases.
Additionally, 2018 saw the return of market volatility as the Cboe Volatility Index (known as the VIX) lodged its greatest yearly increase in history. Volatility and losses were not only unique to the equity markets with losses also impacting other traditional asset classes, such as bonds and commodities. For example, oil rose significantly in the first 3 quarters of the year, only to drastically fall in the final 3 months of the year. It appears that 2019 may likely to be another volatile year for the markets.
Gregory B. Simon Law, LLC is a national securities law firm that provides legal services to investors and financial advisors on a wide range of financial industry matters. For more information on the firm, please visit https://www.gregsimonlaw.com.