Over the last couple of days, the equity market sell-off has been abrupt. Admittedly, the fall was preceded by a correction in the high-yield markets (usually considered a leading indicator) and a drop in commodity prices. The recent build-up of uncertainties (end of QE in the US, weaker economic indicators since the end of the summer, tensions around French and Italian budgets, some disappointments on ECB action, etc.) has triggered a sudden rise in risk aversion and a reassessment (by some participants at least) of growth perspectives. Increasing geopolitical tensions and fears about ebola are also among the factors reviving concerns about the sustainability of the almost uninterrupted two-year rally in the equity markets. Below is a brief summary of the main economic factors put forward to explain recent market jitters: while some are more serious than others, the recent market growth downgrade looks large relative to fundamentals.
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