Stocks around the world are sliding towards a bear market as growth worries shake investors. Photo / AP
In 2018 there has been no place to hide for investors.
A tumultuous year has seen bubbles burst, volatility make a long-awaited return, the record bull run face its greatest threat and trillions wiped off plunging assets.
An unnatural calm on markets has been pushed aside by worries that the economic cycle is about to turn as central banks shut off the stimulus taps and trade tensions show no sign of abating.
Copper, oil, emerging-market equities, Chinese stocks and US tech giants all entered a bear market this year - a fall of more than 20 per cent from an index's 52-week high - while 93 per cent of all assets lost value in dollar terms in 2018, a record according to Deutsche Bank.
US Treasury secretary Steven Mnuchin last week reassembled the "plunge protection team" - the heads of the Federal Reserve, Securities and Exchange Commission and Commodity Futures Trading Commission - to discuss the mayhem rattling markets as stocks continued to tumble sharply ahead of Christmas.
Where did it all go wrong for markets in 2018 and what lies in store for edgy investors in the new year?
Stocks around the world are sliding towards a bear market as growth worries shake investors.
Eurozone stocks are teetering on the brink of plunging into the feared territory, while a decade-long bull run on Wall Street is just a few percentage points away from ending as investors dump the FAANG stocks (Facebook, Amazon, Apple, Netflix and Google) that have driven the record charge.
The FTSE 100 has also suffered its worst year since the crisis, dropping 13 per cent.
While global growth has held up in 2018, dark clouds are gathering on the horizon and investors are battening down the hatches ahead of the storm.
Germany, Italy and Japan's economies are already contracting.
And economists fear climbing borrowing costs, the trade war, fading fiscal stimulus and the budget deadlock will weigh on the US economy next year.
The sell-off in global equities has gathered pace in December after the Federal Reserve - the US central bank - offered companies little relief from tightening financial conditions in its last meeting of the year, laying the groundwork for two more interest-rate hikes in 2019 and leaving its quantitative tightening policy on "auto-pilot".
A more dovish outlook by the central bank was lost in its clumsy messaging to markets and, irked by rate rises increasing the pressure on the US economy and a year of stocks turmoil, Donald Trump has ratcheted up his criticism of Fed chairman Jerome Powell less than a year after appointing him to the job.
Those growth jitters have exacerbated the collapse in oil prices in the final few months of the year.
Premature whispers of a return to US$100 per barrel are now a distant memory as fears of another supply glut drag prices deep into a bear market.
Trump's fingerprints are all over the wild swings in crude prices in 2018.
The US president has used the White House's clout to keep prices low by ramping up the pressure on oil cartel Opec and its kingpin producer Saudi Arabia, which has been weakened by the international outcry over the murder of journalist Jamal Khashoggi.
Prices hit a four-year high of US$86 per barrel in October on fears that reinstated US sanctions on Iranian exports would squeeze global supply, with major producers lacking the capacity to counter with higher production.
But Trump has handed waivers to major buyers of Iranian oil to stop a jump in prices, US shale production has boomed and traders fear slowing growth will curb demand.
Since its October peak, oil has slumped 40 per cent to just above US$50.
"For a brief period the energy market in 2018 bore all the hallmarks of having stabilised with some sense of normalcy returning but that all changed in October," explains UBS analyst Jon Rigby.
"Uncertainty and volatility once again reign."
Opec stepped in earlier this month to prevent another oil price crash, vowing to turn the production taps back off.
But the fate of the oil market in 2019 appears to be intertwined with the health of the world economy.
2018 was the year of the populist with its unpredictable spectre haunting every part of the market.
The political consensus in once-stable democracies in the US, UK and Italy has been ripped up and strong-arm leaders have roiled investors with unconventional economic policies.
Populist candidates swept to power in Italy, Mexico and Brazil, while markets have been hit by Trump's trade war and Turkish president Recep Tayyip Erdoğan's refusal to calm investors as the lira collapsed.
The EU, Canada and Mexico bowed to pressure to tweak their trade arrangements with the US but Trump has faced a tougher adversary in Beijing in his global trade war.
The outcome of US-Sino trade talks is "unpredictable" and "there is a danger that tensions may escalate further", says William Lam, Invesco co-head of Asian and emerging-market equities.
"However, as the negative implications of tariff increases for the US economy become clearer, there is also a possibility that striking a deal becomes expedient."
The dispute has rocked stock and metals markets, derailing the recovery in commodity prices and sending copper prices into a bear market.
Meanwhile, the bond market has been roiled by the Italian populists' clash with the EU over its plans to splash out to boost growth in its ailing economy, but a deal on the 2019 budget targeting a lower deficit has now been struck.
There are also some encouraging signs in battered emerging markets.
Tainted by Chinese growth stuttering to its lowest level since 2009 and crises surfacing in Turkey and Argentina, emerging-market equities slid into a bear market as its currencies crashed amid fears of the turmoil spreading.
Emerging markets started to stage a modest comeback at the end of the year but the US Fed's plans to continue hiking rates in 2019 will keep up the pressure on countries that have fuelled growth through dollar-denominated debt.
No other asset better epitomises the stark contrast between the highs of 2017 and the lows of 2018 than Bitcoin.
Swathes of retail investors have had their fingers burnt in a collapse that has wiped around US$700 billion off the value of the cryptocurrency market.
Bitcoin prices have been pummelled by the threat of regulatory clampdowns around the world and high-profile hacks at top cryptocurrency exchanges.
A rush of investment from institutional investors never materialised and the Securities and Exchange Commission in the US has repeatedly knocked back plans to launch a Bitcoin exchange-traded fund.
After surging to around US$20,000 per Bitcoin in December 2017, it is now trading at just US$4,000.
Michael Hewson, CMC Markets analyst, said: "This crypto splat went spectacularly bad in the first few months of this year. Apart from the occasional rally, it has continued to burn fingers consistently along the way, in a fashion that has seen investors look elsewhere."
The pound ends 2018 in limbo on currency markets after a roller-coaster year of political turmoil as the UK edges towards the no-deal precipice.
Market watchers believe the outlook is "binary" for sterling and UK-exposed assets.
Either the pound soars on a deal finally being forced through Parliament or no Brexit materialising at all. Or it plunges towards parity with the euro on a no-deal scenario, triggering a recession the Bank of England believes would be deeper than the financial crisis.
If a deal is struck, the pound's rise would be capped "by the fact that there will be plenty to negotiate during the transition phase with respect to the UK's future relationship with the EU", Rabobank foreign exchange strategist Jane Foley argues, adding that it would rally further if the "PM's resolution with respect to a second vote was wavering" given that "Bremain" is ahead in opinion polls.
This was supposed to be the year the Brexit fog cleared on markets but investors will have to wait just a few months more.
The Fed's December meeting has set a grim tone for crisis-wracked markets as they enter an uncertain 2019.
Investors are concerned that the Fed's latest rate rise is the policy error that will help end the longest ever Bull Run. Speculation is swirling over how bad the turmoil has to be to trigger an intervention from the Fed or whether a so-called "Powell Put" exists at all.
Markets are now pricing in around a 60 per cent chance of a rates cut in 2020 as the Fed reverses course. New York Fed president John Williams said the central bank is "listening" to plunging markets and could "re-evaluate" its rates outlook.
"Judging from the reaction in stocks and not least US Treasuries, the market seems to be telling us that the Fed is making a policy mistake that it will eventually be forced to reverse," explained Ole Hansen at Saxo Bank.
With the end of the cycle in the sights of investors, the question plaguing markets is now not how high the Bull market will go but how long it has left.
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