Why are global stock markets in turmoil?

A correction of around 10% is thought healthy in a long-term bull market - but more extensive falls usually signal that something is badly wrong, says Jeremy Batstone of Charles Stanley. So what are the reasons behind the current turmoil in equity markets? And was May's volatility just a blip, or are markets at a turning point?

Generally, a correction of say 10% is considered healthy within a long-term bull market, but if it extends beyond this level it normally signals that something is lurking in the woods.

The bull case for equities revolves around strong corporate earnings, cash flow and low relative equity valuations. Increased M&A activity and record world growth have helped but these two drivers could be peaking as financing takeovers becomes more expensive and leading indicators appear to be rolling over.

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