Global equity markets have fallen by 6 per cent since the end of April, and have now given back all of their gains for 2011. After appearing immune to higher oil prices and the global economic slowdown for quite a while, investor complacency has disappeared in the past couple of weeks, and stockmarkets have fallen fairly sharply.
In my opinion, this drop has been triggered by the realisation that policy-makers around the world are no longer in any condition to rescue the global economy from a further slowdown, should that occur. Economies, and therefore markets, are currently flying without an automatic safety net from either fiscal or monetary policy. And that brings new risks, compared to the situation which has been in place for most of the period since the 2009. Read more