But, while in previous battles it has had, as a champion, a single issue, like an equity bubble in China, much of the fall seen so far in 2016 has taken on a more amorphous character.
Growth fears stalk European and Wall Street stock indices, read one FT headline on Monday morning, which, in some ways sums things up. Markets are worried that the global economy has not really shaken off the beating it took in 2008 and, even as it strains to get back on its feet, remains too punch drunk to defend itself properly from any further onslaught.
Part of the problem is that while central banks became increasingly hawkish on the prospects for growth in the developed world, the data underlying that optimism didn’t improve quite as much as expected. Indeed, since the Fed raised rates in December, economic data has gone the other way, as my colleague Alex Sebastian pointed out last week.
Likewise corporate profits haven’t come in as robust as markets hoped. As Woodford Investment Management chief investment officer, Neil Woodford pointed out in an investor update video last week, much of the markets’ recent worries have come as their disappointment with corporate profitability has risen.
“Notwithstanding dovish central bank intervention, both the Japanese and European equity markets have continued to fall."
“There is a realisation that the weak economic backdrop is going to have an impact on earnings. And, by implication the valuations that we have talked about as being quite high, were going to come under pressure,” Woodford said.
