The fact that the current sell-off in stock markets is not driven by fears of a slump in the global economy is significant and marks it out from other bouts of volatility seen in the past three years, strategists say.
Concerns that the U.S. Federal Reserve could start unwinding its massive monetary stimulus program later this year sent equity markets into a tailspin last week, with the heightened volatility extending into a new week as Asian markets opened lower on Monday.
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The S&P 500 last week suffered its biggest three-day drop in over a month, Japan's Nikkei stock index tumbled as much as 4 percent in early trade on Monday, extending last week's fall of more than 3 percent and European shares on Friday fell to their lowest level in about three weeks.
"It's worth noting that the correction over the last week was very different to the global growth scares seen around mid-2010, 2011 and 2012. This time around there hasn't been a peep out of Europe and bond yields rose over the last week rather than fell as in the last three years," said Shane Oliver, chief economist at AMP Capital in Sydney, referring to safe-haven bonds that tend to benefit when investors shun risk assets such as equities.
In recent years, European markets in particular have been hit hard by heightened volatility globally or been the source of that volatility as was the case last July when worries about Spain's finances sparked concern about the euro zone's future.
"In other words, this time around it's more about nervousness as to when the Fed [U.S. Federal Reserve] might change direction and not about a possible slump in global growth," Oliver added.
So the fact that the outlook for the global economy is better than it was six months, albeit not stellar, means the outlook for equities overall remains positive, analysts said.