An investor who has the luxury of being insulated from the daily gyrations of financial markets might open his or her current quarterly statement and conclude that the overall figures for the first three months of 2016 paint a picture of relative calm.

In reality nothing could be further from the truth. It has been a hectic, sometimes traumatic ride, with the integrity of the financial system being briefly questioned and ghosts of the financial crisis rattling their chains.

The fact that we have emerged relatively unscathed is testament to the fact that things were never quite as bad as feared.

Thanks should also be offered to central banks, which continued to offer assistance in the face of adversity, something which we have continued to believe they will do.

While proving linkages between market events is more art than science and open to a wide range of opinions, it is probable that the Fed’s decision to raise interest rates in December for the first time since July 2006, combined with the threat of further rises ahead, laid bare many of investors’ underlying fears.

These included concerns about China’s economy, the cyclical surplus of supply over demand in many commodity markets, and the perceived fragility of the financial system.

Is it mere coincidence that investors rediscovered their appetite for risk as soon as it became clear that the Fed was once again willing to postpone rate rises in the face of potential global dislocation?

The Fed’s interest rate policy affects a number of asset markets. Prime amongst these has been the dollar, which until late 2015 had been rising strongly for about eighteen months.

A rising dollar puts pressure on overseas borrowers of dollars, contributes to lower commodity prices and suppresses the profits of US companies. Rising dollar interest rates tempt spare cash back to the US, starving the rest of the world of liquidity.

China’s transition is changing the nature of its long-term growth, with much less emphasis on the

import of commodities necessary for the construction of major infrastructure projects, and greater attention being paid to domestic reforms that will encourage domestic consumers to spend more on local goods and services.

These two influences intersect most visibly in the performance of emerging economies, which have had a voracious appetite for dollar liquidity and in aggregate have been big suppliers of raw commodities to China.

The fact that the Fed has taken its foot off the brake and that China’s government has tried to smooth the path by undertaking both monetary and fiscal stimulus has alleviated some of the stress in the short term, but a return to the status quo ante looks implausible.

Politics has also reared its head as a greater influence on investor sentiment. At home we have the prospect of a referendum on the UK’s membership of the European Union, with the pound and more domestically exposed companies experiencing most pain.

The UK’s referendum on its membership of the European Union could open a Pandora’s Box of negative consequences for markets, more especially if the vote is for a “Brexit”.

The UK itself is vulnerable to uncertainty, not least because it runs a persistent current account deficit which amounted to 7% of Gross Domestic Product in the final quarter of 2015.

Bank of England governor Carney has said that we rely on the “kindness of strangers” to fund this gap, and those strangers could be deterred from extending their generosity if the UK is faced with potentially years of uncertainty as trade agreements are renegotiated.

In Europe, anti-austerity and anti-immigration movements are creating a more polarised environment, while in the US similar extremes are being seen in the support for Donald Trump for the Republicans and Bernie Sanders for the Democrats.

The build up to and results of these votes has the potential to cause considerable disruption in the months ahead.

Although we see reason for caution in the short term, will still hold belief that equities continue to provide the best risk-adjusted investment opportunity in the long term.