The Australian share market has entered a 'technical correction', while war, economic uncertainty and higher interest rates creat the perfect storm.
A technical correction is a bit of financial markets jargon for a market fall, from a recent peak, of 10 per cent or more.
It means the index is down 10.3 per cent from its all-time high, and 9.5 per cent from its peak in February. A Middle East war involving Iran and Saudi Arabia has the potential, apart from the obvious human tragedy, to lead to a sustained oil price shock."The next table looks at the major events that led to the Geopolitical Risk Index spiking to historical extremes and initial market reactions in the US S&P500," AMP's deputy chief economist Diana Mousina said.
Pandemic economic stimulus and a re-opening of boarders in late 2021 lead to some of the strongest inflation the world has seen in a generation. He said there were no obvious signs of "Chinese stimulus" at this point which only adds to fears of a global economic slowdown.Again, this is a bit of financial markets jargon. Put another way, it appears many investors are not trading at present and are waiting for the economic and political environment to improve.Share markets are inherently risky places to invest, which is why investors demand a premium "return".
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