What started out as a rosy week with global equity markets soaring off of a positive outcome between Trump and China at the G20 meeting over the weekend quickly came to a halt Tuesday, with indices plummeting back to November lows. The previous week’s gains were wiped out in a matter of hours, as several technical levels were breached that caused accelerated declines likely led by algorithmic trading firms. Confusion over the actual outcome of the trade meeting led to widespread conjecture that the terms announced were overstated and growth fears returned for investors. Further evidence of a possible global slowdown was seen in fixed income markets, where bond yields dropped as investors purchased bonds in a flight to safety from equity prices.

There remain many unanswered questions for investors of where we go from here. With stocks apparently range-bound and close to where we began for the year, it is looking increasingly likely that 2018 may go down as one of the worst years for investors since the 1970s, with hardly a single asset class performing well. We appear to be at a crossroads, where slow growth, restrictive monetary policy, and protectionism face record profits, phenomenal employment figures, and muted inflation. The record liquidity provided by central bankers after the financial crisis is being steadily withdrawn, removing one of the most significant pillars of the current bull market. One of the central questions moving forward is, can markets survive at current levels without their support?

The lingering fears from a messy Brexit appear to also be weighing heavily on markets, with the potential for a “hard Brexit” increasing in likelihood by the day. The inability of the UK government to come to an agreement both internally with parliament and externally with the EU could spell significant trouble for the economy if the deadline is reached with no plan. For now, all options remain on the table, with calls for another referendum, an acceptance of the current deal, or a renegotiation with the EU all as possible outcomes. The significant unknowns have hammered British equities, with the losses this year returning the United Kindgom’s benchmark index, the FTSE 100, back to levels seen in 1999. Adding to the turmoil this week was the arrest of the CFO of one of China’s largest technology companies, Huawei, who was suspected of violating US sanctions on Iran. With tensions already boiling over from trade disputes, technology transfer, and intellectual property theft, markets took this as another potential thorn in the side of trade negotiators whose progress is already being questioned.

We are keeping a very close eye on equities, as we are approaching selling levels where raising cash may be prudent if further downside seems likely. While we still maintain that the selloff is mainly sentiment driven, and strong fundamentals remain in place, it is not unheard of for investor feelings to be enough to drive markets off a cliff. All the uncertainty and negative newsfeed will likely keep down any hint of optimism for now, particularly as key support levels are broken on the indices, which can have a domino effect. Now that markets are sitting back at the same low levels seen in both of the recent pullbacks this year, we’re taking a measured approach to reducing risk in portfolios.