What's next for Europe?
The eurozone continues to teeter on the brink of disaster with Greece, Spain and Italy struggling to keep their debt under control, making investors increasingly nervous.
In June, Spain and Italy's bond yields hit dangerous highs as the markets showed concern over both countries' economic woes. Meanwhile, Greeks went to the polls to vote in a new government to tackle the country's fiscal crisis.
All the uncertainty has hit trading volumes with many people choosing to simply sit out the crisis away from the stockmarket. So what should you do with your investments?
Many experts expect the eurozone to endure a prolonged recession, regardless of what happens to individual countries.
"It will take substantial action from the world's largest central banks to turn the global growth cycle back up again," says Trevor Greetham, director of asset allocation at Fidelity Worldwide Investment. "In the meantime, we remain cautious on stocks and commodities, preferring gilts, global property and cash in our multi-asset funds."
If you are hoping to stick with stocks, "blue-chips with strong balance sheets, superior business models and attractive dividends remain the stand-out investment in financial markets," says Barry Norris, a partner at European fund management boutique Argonaut Capital Partners.
Can the euro still work?
But it hasn't all been bad news.
Greece's latest election result was a good outcome for the eurozone, with the New Democracy party scraping a win. The party is in favour of Greece sticking to the terms of its bailout deal, which will see Greeks enduring deep cuts in order to try to bring the country's economy under control.
"Only time will really tell, however, if Greece can drag itself out of the mire from here, but the odds remain stacked against both Athens and the eurozone as a whole," says Jason Gaywood, director of currency specialist HiFX.
"Sooner or later, the fundamental question has to be asked as to whether we can realistically expect one interest rate and one currency unit to work with economies as divergent as Germany and Greece."
And even if Greece can sort itself out the problems facing the much larger economies of Italy and Spain may well continue to destabilise the eurozone.
In June, an £80 billion loan to Spain failed to reassure the markets, with yields staying above 7% - a euro-era record for the country. These rising borrowing costs mean Spain may soon be unable to finance its own debts and be forced to seek an international bailout.
Greece, Ireland and Portugal were all forced to do the same when their 10-year bond yields rose above 7%. Italy is also struggling with rising debt costs as its bond yields have risen above 6%.
The term is interchangeable with stock exchange, and is a market that deals in securities where market forces determine the price of securities traded. Stockmarket can refer to a specific exchange in a specific country (such as the London Stock Exchange) or the combined global stockmarkets as a single entity. The first stockmarket was established in Amsterdam in 1602 and the first British stock exchange was founded in 1698.
The familiar name given to securities issued by the British government and issued to raise money to bridge the gap between what the government spends and what it earns in tax revenue. Back in 1997, the entire stock of outstanding gilts was £275bn; by October 2010 it had surpassed £1,000bn. Gilts are issued throughout the year by the Debt Management Office and are essentially investment bonds backed by HM Treasury & Customs and considered a very safe investment because the British government has never defaulted on its debts and this security is reflected in the UK’s AAA-rating for its debt. Gilts work in a similar way to bonds and are another variant on fixed-income securities.
A term applied to raw materials (gold, oil) and foodstuffs (wheat, pork bellies) traded on exchanges throughout the world. Since no one really wants to transport all those heavy materials, what is actually traded are commodities futures contracts or options. These are agreements to buy or sell at an agreed price on a specific date. Because commodity prices are volatile, investing in futures is certainly not for the casual investor.