With the much expected interest rate hike that the U.S. Federal Reserve made good on in the middle of last week, most of the media’s attention — aside from the usual impact to the domestic equity indices — was centered on the crude oil markets. It’s easy to see why. The international benchmark Brent Crude Oil suffered an intractably large loss of -17.4% so far this month, while West Texas Intermediate — despite paring losses — didn’t do that much better at -14%. Quite clearly, the year can’t end fast enough for a majority of oil producers.

The member states of the Organization of the Petroleum Exporting Countries (OPEC) haven’t helped matters, refusing to artificially cap production limits. However, OPEC can’t absorb the entirety of the blame when it comes to oil price deflation. True, oil exporters have one key incentive in keeping prices low by driving people out of alternative energy sources. But there is clearly a broader loss of demand that accounts for a bulk share of the losses experienced in the crude oil industry.

Essentially, global markets — particularly those in Asia — have not picked up the slack. Japan’s Nikkei 225 is down -5.6% in December after recovering heartily from the global market collapse a few months ago in late-August. On the other hand, China’s Shanghai Composite Index is up 3.5% in the current month, yet its momentum is far removed from the 59% jump we saw between March and June of this year.

Lost somewhere in the middle is the Hang Seng index, which covers the wide range of businesses in Hong Kong, as well as listing several Chinese companies. For December, the Hang Seng is down -2.8%, with volatility in the aforementioned crude oil markets, as well as questions surrounding the impact of the Fed’s rate hike, pressuring valuation as we head towards the final days of 2015.

Hung Jury On The Hang Seng Index

More concerning than the near-term loss is the unfortunate trend that it represents. Year-to-date, the Hang Seng has shed nearly -9% of valuation, with most of the underperformance occurring in the second half of this year. Of the 13 times that the Hang Seng experienced sharp volatility against its prior session — defined as a loss of -2% or less — only three such incidents occurred before June 30. Furthermore, of single-day losses that measured -1% or less, 60% occurred after June 30.

Here’s what investors need to know. Despite empty platitudes that the U.S. markets can survive an interest rate hike, the rest of the world isn’t exactly following suit. If they did, demand for energy and essential commodities would increase. Certainly, the volatility in energy wouldn’t be nearly as severe.

Unfortunately, the facts don’t support much optimism for investors. Most everyone is taking off less risk and that may mean deflation is going to be an unwanted guest for the foreseeable future.