Is the "bubble" of US equity markets nearing the explosion? Or is the current volatility in the market normal? These are the questions raised by senior investors and are discussed by specialists when they talk about the future of the US stock market.
On Tuesday, the US stock market suffered a shake, as selling continued on a large scale in the stock market, particularly for technology companies that suffered significant losses.
The Dow Jones Industrial Average lost 550 points to close, down 2.2 percent from Apple, which plunged 5 percent.
The broader S & P 500 Index fell nearly 500 points and lost nearly 1.8 percent.
While the Nasdaq fell 1.7 percent to its lowest level since February.
The following day the stock recovered relatively, especially in the morning sessions, as the sell-off of the stock exchange on the previous day, and the Dow Jones was up 164 points.
However, fears remained dominant in the general behavior of speculators in US markets. By Thursday, fears had reached the other side of the Atlantic, and reinforced by the clouds surrounding Britain's issue and its exit from the European Union.
The benchmark FTSE 100 index closed at 1.19 percent.
The question becomes: How do markets read the current movement in the stock market? And in order to understand the various developments, the Economist surveyed the views of a group of economic specialists, especially in the stock market.
Kumar Campbell, financial analyst at the London Stock Exchange, said the decline in the US stock market or the London Stock Exchange was linked to a range of factors.
He noted, "the worsening trade war between the United States and China, after the failure of the Asia-Pacific Economic Summit (APEC) summit, the fears of renewed US-China clash again at the G20 summit, the concern surrounding the status of "Apple" after its stocks fell 6.7 percent that was resulting in a market value of less than $ 1 trillion, the uncomfortable conditions for demand for the iPhone, the company's main revenue source, as well as the Spanish position threatened to thwart the British exit agreement from the European Union as if there is no agreement on the status of Gibraltar, and the widespread concerns about the strength of the global economy, all factors are a situation of instability in the stock market."
The absence of positive market drivers has played a major role in the decline in equity markets in the US and on the other side of the Atlantic.
But some believe that the losses suffered by the markets finally, may not reflect the "panic" among investors, as it reflects a pessimistic sentiment towards the future, which could develop as some analysts believe that the recovery phase of the world's first economy may have entered a phase of erosion.
Dr. Helen Tom, a professor of international economics, said, "The recovery in stock markets in the past period was an expression of optimism in the markets about the economic future. The strong economy has provided protection to exchanges, and now most of the impact of the US President Donald Trump's stimulus to the US economy will decline or even disappear by the end of 2019 or early 2020. The US economy may see further slowdown in growth, which also coincides with the holiday season in the northern hemisphere.
So for many, it's more profitable to take profits and not risk more investment right now."
However, some banking specialists said that central banks, especially the US Federal Reserve, are responsible for the ongoing decline in the stock market, as a result of raising interest rates and stock investment in losing its usual luster.
L. R. Richard, Head of Private Banking at Net West Banking Group, said, "Raising bank interest has made borrowing more expensive for companies, greatly weakening their ability to borrow and expand, then lowering profit rates, and losing investment in the stock market glamor compared to bank deposits. The situation may deteriorate further in the first half of next year as the Fed plans to further raise interest rates. This leads to the expectation of large-scale sales next year, especially in the technology sector and some major retailers."
However, Richard is unlikely to see huge collapses or panic that drives investors to "burn" their investments to speed out of the market. He added, "The idea that there is a bubble in the global equity markets that may have been a somewhat exaggerated expression, as there are positive indicators that prompted investors, especially small investors to attract markets in the past period. The losses that may be exposed to technology companies in the future does not mean the collapse, as its financial reserves are close to $ 2 trillion."
Amid the growing debate about the current stock market situation and the future of global stock exchanges, most of the economists questioned by the Economist carry the blame for the escalating trade war between the United States and China.
Dr. Mandy Miliand, an international trade professor, stressed, "It was not surprising that the first blow in the stock market to technology companies, as the tariff war between Washington and Beijing reflected negatively on Chinese demand for American products, especially technological products."
She added, "Of course, China's consumer base remains strong and able to consume at very good rates, with retail sales growth at 8.6 per cent. This is much higher than the US annual increase of 4.6 per cent in October. Chinese spend more on travel, health care and out-of-home dining, however, we can say that they are in a situation that can be described as cold, which is meaning that they prefer to keep their money in their bank accounts because future situations are uncomfortable due to the pressures of the commercial war."
The prospects for a US-China trade war are open to future rounds, which reinforces the concerns of many companies on both sides.
Fear and anxiety about the future of the war may be more damaging to the stock market than the actual losses of the trade war on the stock market.
Many economists do not hide their conviction that the continuation of that war with the continued rise in interest rates perhaps would push the stock market to lose its attractiveness in the coming year, which could lead to real threats by 2020, especially if the financial incentives resulting from the economic measures taken by the US administration began to fade.
