#MarketTurbulence

Causes of Market Disruption

Market disruption can occur due to a wide range of factors, often in combination. They can be classified as follows:

Economic factors: Economic contraction, high inflation, changes in interest rates by central banks, and shifts in exchange rates can all contribute to market instability. For example, when a central bank raises interest rates, it can make borrowing more expensive, slow down economic activity, and cause a flight from riskier assets like stocks to safer assets like government bonds.

Political factors: Political instability, trade wars, new government policies, and changes in regulations can create uncertainty and affect investor confidence.

Technological factors: Rapid technological developments can disrupt entire industries, creating both opportunities and challenges that can lead to market disruption.

Geopolitical events: Wars, conflicts, or other international events can have a significant and immediate impact on global markets, disrupting supply chains, affecting consumer spending, and creating widespread fear.