CGTN Europe spoke to City Index analyst Fiona Cincotta.
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00:00Let's talk now to Fiona Sincotta from City Index.
00:04Fiona, just how unprecedented is this disruption that we are seeing?
00:10This is huge. I mean, if we have a look at an index which is called the Volatility Index, the VIX,
00:15which is considered to be the fear gauge for the US markets, that's risen to a level of 40,
00:22which is a level which is very much associated with the most turbulent of times.
00:27So, you know, this is something that we've seen. It feels very similar to what we saw in the COVID pandemic.
00:34We've heard you mention that several times. March 2020, the lockdown then,
00:39this is what the same sort of size of moves that we're seeing, the same fear that's being seen.
00:44I mean, if we're just talking about the US tech stock, they've seen around six billion wiped off,
00:50six billion US dollars wiped off, down almost 20 percent from its record highs.
00:57So these are huge moves that we're seeing.
01:00What, if anything, helps investors keep a cool head?
01:07That's a very good question, you know, because there is this saying, don't try to catch a falling knife.
01:12So I think one of the errors may be trying to jump in too soon if you want to sort of try and buy in at low prices.
01:19I think that would be rather dangerous at this time.
01:21But I think the thing to remember is that stock markets do have a tendency of sorting themselves out.
01:28It might take a long time, but we have seen even in the COVID pandemic,
01:33there was a recovery and we've seen stocks rise to record highs earlier this year.
01:38So there is that sense that, you know, don't panic.
01:41Do keep in mind that things can recover and also to balance your portfolio where possible, including exposure to bonds.
01:48The risk of asking a question that starts with how do you capture falling life, falling knife?
01:54What is your outlook for global markets?
01:58You know, I think the outlook is depressed right now, and I think it has the it will likely remain depressed for the time being.
02:06Obviously, we're looking at this period now of slowing growth, potential recession.
02:12Also, at the same time that we could see inflation push higher, which opens this stagflationary outlook,
02:19which is very difficult for the Federal Reserve or other central banks to deal with because it requires different policy measures to sort of support the inflationary aspect or the growth aspect and cut the inflationary aspect.
02:33And so I think, you know, we are looking at a depressed outlook.
02:37I think we'd either need to see a walk back from Trump and some serious negotiations going on with other countries,
02:44which rain sort of lower these tariffs or the Federal Reserve jumping in and cutting interest rates by more than expected.
02:52That could also help support sentiment. But neither of those seem to be happening right now.
02:57As you suggested, the U.S. Secretary of State today dismissing the markets concerns, saying the markets will adjust.
03:05He might be right. I think the markets, they will adjust.
03:10I mean, that's that's the you know, what we would expect to happen.
03:13There will be a bottom. There will be a turnaround.
03:17And the markets do eventually get to grips with what's happening and start repricing.
03:23The problem is, as well, there are big surprises and big shocks.
03:26We know the market doesn't like that. And obviously, these trade tariffs were larger than what we're expecting.
03:32The retaliation from China has been strong and there's potential further retaliation to come.
03:38So I think, you know, we're seeing shocks.
03:40There is potential for more uncertainty and we know that the markets don't like that.
03:44So while there could be a bottom coming at some point, I don't think we're quite there yet.
03:48Fiona, thanks for that.
03:49Fiona Sincotta from City Index in London.