There’s a hint of the financial crisis about this market rout - eToro Tips & Picks

CHINA and global growth fears are likely to dominate markets throughout the week, after they were hammered yesterday in yet another rout for investors.

Oil markets have followed equities downwards and there is unlikely to be a reprieve for European and US equity markets as we go through the week.

There is very much a hint of the financial crisis about what is going on. We could well be left in a situation where any brief market sell-off in China or piece of negative data is met with full-blown panic in the West.

All of this turmoil very much points to a risk-off environment, as many try to put their money into less risky assets.

With this in mind, it’s worth keeping an eye on the healthcare stocks – the big pharmaceutical companies are an old fashioned safe haven, but one that is still working today. Also look to gold. It’s another historical safe haven but, as they say, the old ones are the best.

We must first wait for the dust to settle, however. When that will happen is anyone’s guess.

The other big worry will be whether this turmoil derails plans in the US for a rise in interest rates. Fundamentally, the country’s economy has been performing well. However, after the heaviest falls in markets since the financial crisis, Janet Yellen and the Fed will definitely have food for thought when deciding whether to subject the market to more downside pressure.

James Hughes is chief market analyst at eToro.

ETORO POPULAR INVESTOR
ANNIE CHARALAMBOUS @ANNIETORO

With all else falling around the world, it’s time to look out for something else to trade and find out exactly where the smart money is going.

I think we should be pushing towards some of the pharmaceutical companies.

The pharmaceutical industry continues to grow and it’s an old fashioned safe haven.

With a lot of money being put into research into exotic diseases and huge amounts of M&A, the pharma sector is one to keep an eye on when everyone else is losing their mind.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.