Of late there has been a great deal of nervousness around the market, with the last recession remembered only too well, as it was only last year that the recovery began in earnest.
Now it must be noted that the stock as always in the past ran well ahead of the actual recovery which is still advancing at different paces in each of the Continents.
Shares had reached all time highs with PE's that told the tale that were heavily overbought ! This resulted in side way motions and they were easily upset by any and all events such as the still simmering Ukraine crises, the bombing of ISIL, the thought of how China might react to moves for democracy etc.
The American market is still seen as a safe haven in these troubling times which is leading to their currency strengthening further.
The ending of quantertative easing this month has turned into a non-event. The thought of interest rates increasing in the United States has caused nervousness in the market as share prices are still ahead of the recovery,at the moment there more people in jobs than there was before the recession.
No need to panic as the recovery is likely to continue for a number of years yet as interest rates will climb slowly and only in the United States when they go above 5.5% will the Federal Reserve start to warn the share traders that the market is "overly exuberant "as
Greenspan put it last time before there was a pull back and a recession started.
In South Africa's case when interest reaches the teens then a retreat in the market is usually imminent, of course our deficits are causing a delay in our recovery. Our government must to take further steps to see this does not get out of hand, as then this will force interest rates upwards.
