Equity Markets Fall...

Global equity markets tumbled on Friday amidst a raft of bad news and political uncertainty.

Volatility in markets, until this week had been fairly benign, even through the Cyprus crisis. However, this week has seen a spike in volatility and led to big losses globally. So what has caused this steep fall?

Well there has been a run of poor data out of the U.S. this week. Manufacturing growth and jobless claims all disappointed and these are both significant indicators and naturally caused a pull back in equities.

Commodities have been hammered this week largely on the back of news of large inventories. This indicates to markets that there isn't the global demand to purchase these raw materials thus highlighting growth is not at expected levels, again causing markets to fall.

Then behind this disappointing back drop North Korea tensions have continued to boil and the market has also re-trained its eye on Europe following the Cyprus crisis... all in all a lot of bad news for markets to receive over a week or so!

The question is what now? Well safe haven assets, such as Treasuries and Gilts have had a good week, as there has been a flight to safety. I've been caught out a little by this given the historical high price (and therefore low yield) of these assets, however it still seems they are attractive to investors at certain stress times in markets. Gold, it seems has not behaved as one would expect and has fallen as low as $1,550oz this week. This has occured even when equities have fallen off and geo-political tensions have risen - there could be a fundamental shift in gold currently, definitely something to keep an eye on (Gold).

So many equity investors will have experienced losses this week - but all in all equities have still performed strongly this year. The question is what will happen next week, will it be a case of a rise in equities as investors pile in at a cheaper entry price, or will investors continue to be spooked, sell equities to lock in profits and prices fall further? In these volatile times it's often hard to call....