Global shares had a bumpy couple of weeks, as strong economic data and corporate earnings were offset by geopolitical concerns. Most major markets had a positive start to the week as investors regained their composure after last week’s sharp sell-off, with many indices posting their largest one-day rallies since March.
What caused the sharp sell-off?
The main reason underpinning the pullback was a response to concerns that rising interest rates (increasing bond yields) in the U.S. would cause a national or global slowdown.
This compounded with rising US – China trade tensions and other macro-economic news from around the world caused the market to ‘connipt’.
The obvious question is, what now?
Should inflation and wages in the U.S. surprise on the upside then the Fed may be forced to move rates more aggressively, this would definitely not play out well for equity markets. We continue to monitor risk and retain our view that whilst a cautious stance is warranted, we do not expect “the sky to fall” anytime soon. What we do expect is a choppy period of consolidation as markets come to terms with the normalisation of rates in the US.
If you have any questions regarding the recent market developments or your portfolio positioning, please contact your adviser.
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