The View | Global market sell-off has shaken investors out of their complacency – and that’s a good thing
- Nicholas Spiro says debate over the causes of the severe deterioration has been fierce. Whatever the reasons, the return of volatility has been useful in ridding markets of complacency, arguably the biggest risk in recent years
What a difference a month can make.
On September 20, the benchmark S&P 500 equity index hit a record high, closing just 70 points below the lofty level of 3,000. Yet by the time markets closed last Friday, the index had lost 9.3 per cent, putting it on track for its worst monthly performance since February 2009.
In a sign of the abruptness and severity of the sell-off, two of the five worst trading sessions for the S&P 500 since 2015 have occurred in the last fortnight, according to data from Bloomberg. Global stocks, moreover, which have lost 9.4 per cent in October, are on course for their worst month since the height of the euro zone crisis in mid-2012.
Yet it is the sharp deterioration in sentiment in America’s once-resilient stock market – the S&P 500 has swung from an all-time high to being on the verge of entering correction territory in the space of just five weeks – that has stunned international investors and sparked a fierce debate over the precise causes of this month’s sell-off.