Stock Markets: A Perfect Storm Brewing

Policies to reign in inflation and a looming Russian invasion of Ukraine are frightening investors, causing indexes to tumble this week

• For stock markets to enter a longer phase downturn, there often have to be several forces at play. This is exactly what is happening so far this year. Investors are getting nervous.
• Two developments are driving the current selloff: the prospect of higher interest rates due to rising inflation and the looming Russian attack on Ukraine. Both issues will not go away quickly.
• The question discussed among investors is: Are they dealing with a temporary correction or are the markets headed for a bigger downturn after years of growth? So far cautious optimism prevails.
• Cryptocurrencies are being sold off at pace. These network tools based on blockchain technology were originally meant to withstand common market turmoil.
• In our reading today, we explore the forces behind the current selloff and their significance for the wider economy.