How could turmoil in financial markets affect you?

How might the turmoil in the world’s financial markets affect you?

Shockwaves from Donald Trump’s tariffs continue to reverberate across the world.

We haven’t seen this level of a drop in global stocks since the financial crisis in 2008 and the Covid-19 pandemic.

You might think the current blizzard of bad news headlines is confusing and that it doesn’t really matter.

But here’s how it might affect you and your finances.

Do you have a pension?

If so, the money you pay in is very likely being invested on your behalf, in the stock market.

And significant drops can have a knock-on impact on your pension pot.

Although, the closer you get to retirement, the more likely it is that whoever manages your pension has moved your money into less risky investments and cash – meaning you should be less exposed to any price volatility.

Are you working for someone?

Literally trillions of euro have been wiped off the value of stocks in the past week.

These huge drops can influence business decisions that affect employees.

For example, if a company’s share price slides enough, it can put pressure on management to make changes to save money.

This could involve reducing investments in things like new factories, or cutting back on staff numbers.

Do you have a mortgage?

The European Central Bank has been cutting interest rates recently.

But it could halt rate cuts, with any potential signs of inflation spiking because of what’s happening globally.

This would be bad news for borrowers, who would pay higher rates on loan repayments.

Maybe you don’t have a house or a pension… but are you dabbling in crypto currencies?

Well, they’re dropping too.

Bitcoin has lost over €6,000 in value since Friday, and is at its lowest price in five months (hovering just above €70,000 today).

While Ethereum, the second largest crypto currency, saw a sharp decline of around 18% this morning.

Is there any good news in all of this for consumers?

Well, maybe a little … the price of a barrel of Brent Crude oil hit its lowest level in four years this morning, so petrol and diesel should get a bit cheaper in the short-term anyway.

Also, as mentioned above, inflation is a risk – but with the current level of uncertainty in global markets – so too is recession, which brings its own challenges, but could lead to prices for consumers easing somewhat.