Economic Confidence is Back, Could We be Heading for a Stockmarket Crash?

Confidence appears to be returning to the marketplace with both the Eurozone and the US moving out of recession. Mortgage lending has risen to its highest levels since 2008. Interest rates are at record lows and the government is fuelling the housing market through its new Home Buy Scheme. This all sounds very positive. The stockmarket on the other hand is showing signs of a slowdown whilst the gold price has bounced back to $1,400. The market has been extremely volatile of late as noted during a significant overreaction to the Fed’s announcement over the proposed tapering of it’s Quantitative Easing (QE) programme. The mere mention of a reduction in QE saw a large drop on the stockmarket. Could it be that we are headed for a stock market crash? The stockmarket has reached all time highs and has been rising since the start of the year despite a weak economic background. A stockmarket correction is inevitable although whether this happens in a matter of months or years is anyone’s guess.

We would urge our readers not to panic as this could lead to bad decisions being made. A stock market crash is not necessarily reflective of the underlying economic conditions. The stock market has reached record highs and so a crash at some point is inevitable. However, this is not reflective of what is happening in the global economy which is slowly showing signs of recovery. Contractors and small businesses will be largely unaffected by a stock market crash as this is unlikely to impact their daily business.