Was the market shakeout of the past few days a harbinger of a wider downturn? And if so, was it perhaps severe enough to undermine the present expansion phase of the world economy? Or was it just a healthy and much-needed correction, triggered by rising US interest rates, Donald Trump’s threat of a trade war and the Facebook scandal?

We cannot know of course, but here are five things to look for in the coming weeks that will help us gauge how serious the impact of this market environment might become.

First, there will be China’s response to the Trump challenge. China has been a huge beneficiary of the liberal trading regime. You can argue as to whether China has unfairly exploited the opportunities this has provided, as Donald Trump has argued, but a trade war would do deep damage to the Chinese economy. Early signs are that China will be very measured in any retaliation it makes, for so far it has made the softest response. If this continues and China makes sufficient concessions to the US, this will be very positive for the world economy. 

Second, have we hit “peak Facebook”? Has Mark Zuckerberg done enough to buy time to fix the privacy issues, and will Facebook be able to satisfy both its users and its advertisers that it has done so? The key point here is that this is not just a matter of privacy; it is a challenge to the Facebook business model. It will take some months before we, and indeed Facebook, can possibly know the extent of the damage, but the markets will be quick to judge. Watch the Facebook share price this week.

That leads to a wider issue: is Facebook-related doom contagious? The US high-tech giants dominate not just US equity market valuations but global ones too. So the question here is whether there will be a wider meltdown of the share prices of high-tech America. If there were to be, say, a 40 per cent fall in the valuation of the technology sector, the wealth effect – or rather the loss of wealth – might be enough to push the US into a mild recession. That would not in and of itself be a catastrophe, for typically the US does enter a recession about every 10 years, but I’m not sure the world is adequately aware of the dangers. Is, for example, the European economy solid enough to cope? 

When trying to spot turning points in the real economy, as opposed to financial markets, one of the things to look at is what is happening to monetary growth. Is there a slowdown in the growth of global money supply? Simon Ward, economist at Janus Henderson Investors, has been warning about this, and while monetary trends are affected by lots of things – from quantitative easing to interest rates and rules around bank lending – and are by no means a perfect forward indicator of the direction of the global economy, the numbers worldwide do look a bit weak. 

Finally let’s watch what is really happening to world trade, rather than all the stuff about what might or might not happen. I’m grateful to Capital Economics for noting that in January world trade expanded at the fastest pace since 2011 and that other measures, such as air freight and container traffic, were very strong too. I just wish people would forget the politicking and focus on what is actually happening. If those trade numbers keep growing we can all relax a bit. If not, that’s the time to worry.