Online XTrade Europe investors look pretty much relaxed these days, which is strange, especially when we know the situation on the global market. The fact is that risks grow every single day, but it seems nobody cares about it. Maybe it is all because of relatively steady values of risks indexes (City index and Barclay FX), which are at the lowest level from the beginning of the year.
What To Experts At XTrade Europe Say
However, experts at XTrade Europe say this situation should be taken with extreme caution and that investors can suffer a huge loses if they continue behaving like this. Chirtopher Dembik from Saxo Bank is convinced that investors did not evaluate risks properly. He says that we can expect big turbulences on the global market, primarily due to political crises (elections in the US, referendums in Italy and Hungary). All these events can significantly affect the market and turn currently stable situation in the financial chaos.
However, it does not have to be that way. Consequences of these political earthquakes can be reduced or even avoided if central banks use their mechanism to “protect” the market. We already saw the power of these mechanisms after Brexit voting. On the other hand, we have to accept the fact that the power of central banks is limited. Nothing can eliminate effects of big crises, which is why investors should wake up as soon as possible.
What’s The Situation?
We can say we have a crystal clear situation here: lower profits and higher risks caused the so- called speculative balloons, which can explode anytime. That can only mean one thing: every single activity in the monetary politic will have limited results. This is why everyone waits to see what FED will decide. However, we should not expect huge turns in a current monetary politic. According to XTrade Europe experts, the best month for rising interest rates is September, so we should wait for a while to see what will happen. Of course, the final decision will depend on the economic parameters from previous months. For now, chances for rising interest rates are 50:50.
Probably the biggest challenge for online investors will be the political situation in the US, especially upcoming presidential elections. Nobody knows what will happen, and which candidate will declare the victory. Analyzers from Saxo Bank say we should not believe in all those predictions claiming that Hilary will beat Donald. Nobody knows how people will vote.
One thing is for sure: the results will definitely affect the flow of capital. According to results from previous elections, we can say that candidates from Democratic Party have better influence on the US (and global) economy. Let’s look at these number: every time when the Democrats won, S&P 500 index raise more than 11 percent in the first year after elections. In the case of Republicans victory, this index drops more than one percent. However, it would be silly to claim that economy will collapse because of Donald Trump. We just have to know that Trump’s victory will not have such dramatic effect on finances. After all, experienced investors have already calculated this possibility.