The financial markets are one of the most powerful forces in the modern world, so any major global event is likely to have a significant effect. From natural disasters to war and political unrest, any sort of disturbance around the world can have a direct and immediate impact on global financial markets. In this article, we’ll explore some of the most impactful global events on financial markets and their lasting implications.
1. A Bird’s-Eye View of Global Events and Financial Markets
The world is quickly changing in terms of both politics, economics, and international relations. Global events and financial markets have a huge part to play in how the world and its countries develop and interact with one another. The past year has been a year of uncertainty, but also a year of potential growth and development.
Global Events
The past year was a turbulent one with many economic and political changes happening around the world. From the sidelines of the presidential race in the U.S. to Brexit in the U.K., the world has seen its fair share of changes. More recently, the coronavirus pandemic has far-reaching consequences which are still yet to be determined.
At the same time, there have been positive signs. The signing of the Abraham Accords in the Middle East showed that even long-standing conflicts can be put aside in the pursuit of peace. This is a precedent the global community should learn from and build upon in 2021 and beyond.
Financial Markets & Economics
- The pandemic has caused significant economic contraction globally, especially in the travel and tourism industries. Many small businesses are suffering the brunt of it, showing a need for targeted relief.
- At the same time, many markets are poised to rapidly recover due to large monetary stimulus and fiscal policy initiatives. Technologies such as 5G and AI show promise and could drive economic growth faster than predicted, although inequalities must be mitigated.
- Equity markets saw massive gains in 2020 and are expected to remain strong or even reach new highs in 2021 as investors flock to stocks. Gold prices also saw a spike as many flock to the safe haven of commodities in uncertain times.
Global events and financial markets have a huge part to play in creating a better future for everyone worldwide. While 2021 is still filled with uncertainty in many respects, the new year is an opportunity to take the right steps forward.
2. Unprecedented Times: Mapping the Impact of the Coronavirus Pandemic
The Coronavirus pandemic has affected people around the world in innumerable ways, making life unpredictable and forcing many of us to alter our day-to-day routines. From a public health standpoint, it has posed challenges for governments and medical personnel. Economically, it has crippled globel markets, and has left many without their main source of income.
It is an unpredictable, bizarre, and unprecedented situation that has not been seen in our generation. We are now navigating an unknown reality where many aspects of daily life look very different and are impacted in ways that we never expected.
Some of the ways the pandemic has impacted life include:
- Virtual schooling and working from home have become the norm for many
- Public transportation, places of worship, and other public places have closed or adopted additional safety regulations
- Social distancing and mask-wearing have been encouraged to combat the spread of the virus
The pandemic has brought unforeseen financial, medical, and behavioral challenges. Despite all of the difficulties, people are uniting in order to combat the virus and demonstrate their spirit of solidarity and strength.
3. The Role of Trade Wars and Political Uncertainty in Shaping Market Movement
The markets of today, no matter the region, are rarely completely stable, and often experience large changes in prices day-to-day. A lot of this movement is shaped by current political and trade climates, and this includes trade wars and the uncertainty they can bring.
Political games have long been a part of the markets; and while there are more transparent and largely accepted structures in place today, those of power still try to use their position as leverage over their competitors. Countries may defend their own interests by leveraging tariffs and other restrictions that make it harder for other countries to come in and buy or sell on certain markets. This action, along with the uncertainty that accompanies it, can be enough to shift markets in a meaningful way.
Trade wars are much more open and often thought of as “hostile” actions between two countries, with restrictions and increased costs placed upon each other. Not only do these make for a less favorable trade environment, they can also push the energy of the markets in unfavorable ways as prices are affected. The longer these last, the more prominent their effects become within the market.
- They can create geopolitical tensions with neighboring countries.
- They can create uncertainty on the horizon that makes investors more wary.
- They can raise costs of some commodities while reducing the cost of others.
- They can change the flow of regulations and laws which have an impact on the market.
Political uncertainty, in the forms of trade wars as well as the ongoing stories of various countries, can have a wide array of ripple effects on the markets. It’s important to stay informed of the entire geopolitical landscape, or the events in the market may come without warning.
4. Finding Stability and Opportunity in Volatile Financial Times
As our world struggles to find balance in the face of volatility, it is all the more important to take time to consider the strategies that can ensure our finances are secure and successful. Here are a few tips for finding stability and opportunity in this economic climate:
- Understand the landscape. Our current financial system is as turbulent as ever. Research trends, regulatory changes, and watch the news for updates on the fluctuations of the stock markets. The more information you have, the better you are equipped to make smart investments.
- Be flexible and resilient. Nothing stays the same for long in the current turbulent environment. Embrace changes and explore different paths, but always have a plan to move quickly when necessary. Look for potential opportunities that arise, and be prepared to take a different route if needed.
- Diversify. It is more important than ever to diversify your investments. Talk to your financial advisor about the best way to spread your money across various asset classes, in order to minimize risk and maximize potential returns.
- Be prepared. Maintain a cushion of funds in case something unforeseen should happen, and make sure you have adequate insurance policies in place. It is unwise to rely solely on the stock markets, no matter how lucrative it may seem.
In these turbulent times, it is essential to keep your finances secure and invest with prudence. While it is always important to prepare yourself for the future, it is especially important to be prepared when dealing with volatile markets. Investing with caution and a steady hand can open up numerous opportunities, even in the toughest of times.
As globalization continues to make the world an ever-closer global village, it’s essential to remain mindful of how these events can have an impact on finance. From natural disasters to political movements, the international character of global events dictates that they will have an effect on the markets. Gaining a better understanding of these events and their consequences is the key to developing a financially successful future.
