Stock markets across the world are preparing for what could be a turbulent 2022, with many financial professionals expecting a bumpy ride for investors.
High inflation, rising interest rates, continued supply chain issues, and the Omicron variant of coronavirus could each bring with them unique troubles for financial markets around the globe.
Laith Khalaf, Head of investment analysis at AJ Bell, warns that the potential return of Covid-19 restrictions across the world would be a major blow for the global economy.
This is especially concerning for UK investors due to the rise of infection rates and the threat of a new year lockdown looming.
Will Hobbs, chief investment officer at Barclays Wealth and Investments, also warned of the potential impact of international geopolitical issues.
Russian forces are mobilising on the Ukrainian border, tensions remain high between China and Taiwan, and both France and the United States have important elections on the horizon. The results of these events could have unpredictable effects on the global economy.
European markets are also facing their own challenge, with the continental energy crisis poised to continue well into 2022.
Vaccine rollouts and the potential for a strong post-Covid recovery give hope to investors
Despite the many concerns, the success of the global vaccine rollout is a positive sign for investors and market analysts. The gradual removal of social restrictions will hopefully provide a global economic boost and lay the foundation for a strong post-Covid recovery.
Financial experts expect the impact of the pandemic to ease through 2022, with many prominent markets, such as the FTSE 100 and the S&P 500, showing strong signs towards the end of 2021.
Many Wall Street banks have also predicted that equities will continue to rise through 2022, maintaining the strong gains shown throughout 2020 and 2021.
JP Morgan, who recently acquired UK robo-adviser Nutmeg, predict strong economic recovery both within the US, where the company is based, and globally.
They believe that emerging markets, who will benefit greatly from a more widespread vaccine rollout scheme, and cyclical stocks will be among the strongest performers this year.