The U.S. stock markets have been witnessing volatility since February 2018. In fact, two major stock indexes — Dow 30 and S&P 500 — are lingering in negative territory so far this year. Notably, a series of political issues have taken a toll on the stock markets overshadowing the solid growth outlook.
The recent stock market volatility may be transitory in nature, given the strong economic fundamentals of the United States. Further, markets are expected to continue their long-term uptrend.
However, investors should be prepared to minimize fluctuations in their portfolio and consequently should rebalance it with suitable financial assets to maintain stability. At this stage, it would be a prudent decision to pick up great value stocks to cushion the portfolio.
Geopolitical Tension: A Cause of Concern
On Apr 14, the United States, the UK and France jointly launched missiles strikes targeting strategic sites in Syria in response to a suspected poison gas attack by the reigning Bashar Assad government. Notably, Syria is a close ally of Russia and the missile strike immediately resulted in a political conflict between the United States and Russia.
Any escalation of war will no doubt impede the global economic growth. Meanwhile, news has surfaced that Russia’s lower house of parliament is considering a draft legislation allowing Kremlin to ban a list of U.S. products. This is in retaliation to recent U.S. sanctions on a group of Russian tycoon and officials.
Russian president Vladimir Putin has warned the western world that any further attack on Syria will result in a worldwide chaos. The White House is likely to reciprocate with fresh economic sanctions on Russia.
Trade War Fear Looms Large
Markets were gripped by fears of an ensuing trade war between the United States and China after President Trump imposed tariffs of as much as $50 billion of Chinese imports. Consequently, China too announced plans for reciprocal tariffs on about 130 U.S. goods worth of $50 billion of imports from the United States.