Update on investment markets

Provided by Mercer. The information in this article does not necessarily reflect the views of the Trustee.

Concerns over the European debt crisis and slow economic growth in the US have lead to yet another spike in market volatility over the past few days.

A package of reforms announced in late October 2011 provided an initial boost to investor confidence. However, the momentum was soon lost and markets have become increasingly worried about the willingness or ability of Europeans leaders to address their collective debt situation.

Meanwhile, US markets are concerned that political issues will cloud the need for further reform, resulting in additional credit rating cuts and a long period of poor economic performance.

About four months ago, as the world experienced the fiercest volatility seen since the Global Financial Crisis (GFC), our outlook was for "a slow and grinding recovery". We also noted the potential for "a more adverse outcome'', depending on how government policymakers do (or fail to do)."

The underlying drivers of this current volatility remain the same - the European debt situation and problems in the US. As we have indicated previously this volatility is not going to disappear overnight. Debt remains high, the political will to resolve the debt issue is still unclear and the economic growth outlook is very subdued.

We understand that during turbulent phases in the investment cycle even the most confident of investors will experience moments of worry. If you're unsure about your investment strategy – or if you have questions or concerns – please call the helpline.

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