Market Volatility and Uncertainty: Fears of a Global Slowdown

CGTN Europe spoke to City Index analyst Fiona Cincotta about the fears that sparked a massive Wall Street sell-off.

Transcript

00:00Fiona Sincotta is an analyst at City Index. Great to see you Fiona. Is this, as the White

00:06House says, just a blip? Are the markets overreacting?

00:11It's difficult to tell right now. The markets are obviously reacting to fears of a slowdown

00:16and there have been signs. If we look at forward-looking data, particularly surrounding consumer confidence

00:23and business confidence, they have deteriorated quite significantly and that's what's sort

00:28of raising concerns. Now the problem being is that if that then transfers into the hard

00:34data and we really start to see a slowdown, for example, in job creation and in economic

00:40growth, that's when we're really going to get signs that potentially a contraction or

00:44a downturn is happening. We're not quite there yet, but that's not stopping the markets from

00:49fretting over it. And obviously when companies and households start to feel nervous about

00:55the future, that's when they tend to rein in spending so we can see an economic hit

01:02as a result. And then also in addition to that, you've got the worries of increased

01:06inflation because trade tariffs are meant to be inflationary. We do have inflation data

01:12tomorrow from the US, which is going to be watched really closely because the markets

01:17will want to see that inflation is continuing to cool because if it isn't, we see growth

01:22slowing, it means the Federal Reserve's going to have quite a tough job trying to support

01:27the economy. Is there a grand plan, do you think, to reshape the global marketplace or

01:33is the Trump administration making up economic and foreign policy as it goes along? Well,

01:39it definitely feels like that, you know, it does feel like there has been a lot of flip-flopping

01:44and that's why we've seen this real increased volatility in the market. I mean, I would

01:49like to think that the President of the United States does have a grand plan and that's what

01:53he's trying to follow out. But, you know, considering that we've seen trade tariffs

01:56applied and then a slew of delays, exemptions, changes of mind, it does make it very difficult

02:03for businesses to plan, for households to feel comfortable in the outlook. So even if

02:08there is a grand plan, I don't feel like it's being very well relayed to the US economy,

02:15to the US people right now and we're seeing that reflected in the market and that uncertainty,

02:20that nervousness, that's what's making investors just take risk off the table and sell out

02:25of US stocks right now. Look, when Wall Street sneezes, the rest of the world catches a cold.

02:30So if investors are falling out of love with US stocks, what will the broader repercussions

02:36be? Yeah, that's a really good question because there are a couple of ways that this could

02:41go. You know, there is the broader idea that actually that could potentially mean global

02:46slowdown. I mean, if we do see, for example, trade tariffs applied in Europe, we'll be

02:51looking to the beginning of April for any further details on that. Potentially further

02:58trade tariffs on China. I mean, you know, this could really cause quite a big shift

03:03as far as the global outlook is concerned. But then there is another way that this could

03:09go. We could see that we see this big sell out of the US because US exceptionalism appears

03:15to be coming to an end and that might see actually investors move their focus more towards

03:20Europe and Asia, which had underperformed the US in previous years. So that is a potential.

03:27But I do think that there is a little bit of nervousness still that we may see more of a

03:31slowdown in Europe and Asia. And for that reason, we're also seeing a sell off in the markets there

03:36as well. Fiona at Sincotra at City Index. Great to talk to you.