The role of major world indices is to serve as a gauge in their countries’ respective stock market using relative weighted average. They have been significant to the decision making of investors as they provide important data for analyzing and describing market trends. Throughout the years, these indices have both celebrated remarkable feats and suffered demoralizing setbacks, which gave both joy and scare to millions of investors around the world.
Heading to Bear?
Among the major world indices are UK’s FTSE 100, Japan’s Nikkei, Germany’s DAX, and Wall Street’s S&P 500, Dow Jones Industrial Average, and the NASDAQ Composite. Despite a series of political and economic uncertainties, these indices have posted strong performances in 2017, which catapulted them to their respective highs.
The blue chip Dow was one of the biggest winner last year. Buoyed by President Donald Trump’s highly-anticipated tax reform, it jumped from 20 000 in mid-year to 25 000 in December, its highest level in its history.
Likewise, its counterparts from Asia and Europe gained tremendous momentum in the previous year as global economy picked up while oil prices slowly erasing major losses, thanks to the efforts of the OPEC members and allies in continuing the agreed output cut deal.
After a euphoric 2017, where are these major world indices heading this year?
It was pretty stable for the global stock market until a major blow hit some of the major world indices early in February.
With market fear ticking almost 70%, equities around the world suffered its biggest one-day decline, with the Dow dropping a couple of 1000 points in two consecutive sessions while Nikkei, FTSE 100, and DAX all sliding more than 2%.
In a very short period, major world indices gave up some of its gains from a strong 2017. Analysts cited that the global stock turmoil could be the start of an impending correction and that equities might head to bearish trend early this year.
The US stock market has been the culprit of the steep plunge in global equities. The drama in Wall Street often resounds across the world. And recently, investors in US feared that the Federal Reserve would increase its interest rates on a faster pace.
Higher interest rates often pull down stock prices as they can potentially hurt corporate profits.
Stock market may be on track for a bearish trend and major world indices may be suffering steep declines. Should investors panic? Definitely, no. The stock market is just getting started.