WHERE NEXT FOR EQUITY MARKETS?
November 21, 2023 3:11 pm Leave your thoughts21.11.2023 Equity markets have been very volatile in recent months. Below we look at the outlook for the next six months.
Stock market sentiment is significantly influenced by the interest rate outlook for the US economy. This is because the United States economy is the largest in the world. In the first half of 2023 markets priced in US interest rates across 2024. However, the US central bank has refused to go along with this and maintained that it could still raise interest rates further.
Equity markets have also been impacted by the terrible events in the Middle East. Originally markets were worried that the conflict could spread beyond Gaza and turn into a regional conflict that would dramatically raise the cost of oil. However, as time has passed markets have become more confident that the conflict will be a localized one. Indeed, the oil price has fallen back to approximately where it was when the hostilities erupted.
Over the next six months equity markets are likely to fluctuate within a limited trading range. Only when there are clear indications that interest rate cuts are imminent will there be a sustained rally. This will require inflation to be lower and unemployment to a bit higher across the advanced world. With interest rates set at current levels this should be achievable in the coming months.
For information only. Investors should seek professional advice for their own circumstances before making an investment.
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This post was written by Robin