In the first week of 2016 we witnessed the worst trading day of a new year since the 2008 financial crisis. Weak Chinese manufacturing performance, a falling yuan, and geopolitical tensions in the Middle East all contributed to the market upheaval on January 4. As PR professionals, we frequently deal with crisis and upheaval. How might the recent upheavals affect the business landscape in 2016?
Any high hopes traders had for the New Year were put to rest early Monday morning, as a report showed weak Chinese manufacturing growth and a Shanghai Composite Index that would surely plummet.
The report showed the evident failure of China’s monetary and fiscal stimulus policies, prompting the Dow to fall 276 points during the first day of 2016. Given the market upheaval in China and tensions in the Middle East, many investors are focusing on technology and financial firms, as these sectors remain more stable than manufacturing and energy right now.
U.S. investors still remain cautious as trading progresses. Global growth remains weak, and corporate earnings are relatively flat across the board, prompting the current unease.
Following the deterioration of relations between Saudi Arabia and Iran, crude prices rose 3% on Monday. The conflict, which has brought about the end of business relations between the two countries, also contributed to a rise in the price of gold.
It would be wise to keep an eye on the production activity of the two nations, which altogether accounts for about 17 percent of world oil production. If output decreases significantly, this could contribute to a rise in oil prices over the longer term. As more Middle Eastern countries cut diplomatic ties with Iran throughout the week, the U.S. has urged leaders in the region to work together in an attempt to ease tensions.
How do you think the upheaval in the stock market and the Middle East will affect businesses and consumers in 2016? Leave a comment for us below!
_____
Erin O’Connor is a senior account executive at WordWrite Communications. She can be reached at erin.oconnor@wordwritepr.com or on Twitter, @eoc790.
