As we see the fallout from problems in the US sub-prime credit industry continue, it is now starting to have a major impact upon other stock market around the world.  All of the major markets such as the UK and Japan are moving in tandem with the current volatile attitude of US investors.  So where next for world wide markets?

Over the last couple of years we have seen worldwide stock markets buoyed by takeovers, mergers and a high level of corporate activity.  This search for the next “takeover” has pushed many sectors and individual share prices to unsustainable levels, levels which do not represent the true value of a company.

The recent bout of investor profit taking, and general lack of confidence in the market has seen the so called “takeover” premium evaporate form many share prices, with many observers believing that fair value for many sectors is still some way off.  On top of this we have an ongoing crisis in the US sub-prime lending market, a market which has historically “called” the turning point of many economic cycles.

In the words of the old stock market saying, “the US sneezes and the UK catches a cold”, a phrase which now has great relevance to the rest of the world.  The US is such a power house in world trade that any fall out in their own economy is sure to effect worldwide markets.  Investors should expect a continuation in the current down trend, as well as much volatility along the way.  While there appears little chance of a crash, it is well worth keeping a close eye on the markets!