The markets are currently significantly impacted by a variety of factors, which does not offer a rosy picture overall. There are several things that are now being watched, so let's go over them one by one.

Inflation:

This term has been tossed about a lot recently, but it's not going away anytime soon. Following the Fed's repeated interest rate hikes, inflation will be curtailed, but the results will be a lagging indication because the hikes take time to get into the economy. Many analysts predict that the Fed will raise interest rates by three-quarters of a basis point, bringing the funds rate to 4.25%-4.50% by the end of 2022. Rates are anticipated to stay at this level until 2023, after which we could see some pause or pivoting.

Energy crisis:

The conflict between Ukraine and Russia has disrupted the global supply chain and has deprived Europe of energy, a situation that is expected to worsen in the coming winter months. This summer, the critical Nord Stream pipeline was disrupted, exacerbating Europe's already precarious energy situation. Manufacturing activity on the continent has been at its lowest level since May 2020, with large firms like BASF reducing production of ammonia, a nitrogen fertiliser and input for engineering plastics. Several businesses have implemented cost-cutting strategies in order to combat rising prices.

Global Recession:

The world economy is under pressure to enter a global recession as all major banks compete to raise interest rates in an effort to stop inflation. Analysts at the World Bank believe that in order to reduce inflation, all central banks should raise interest rates by two percentage points, slowing global GDP by 0.5 percent in 2023. Although there is strong consensus that a recession is probable in 2023, it is hard to forecast when it will occur and how severe it will be.

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Written By: Thegoldstocks.com

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