20 to 26 March: Walk it Off?

Three weeks ago, we suggested the global economy was entering a significant new phase in which aggregate monetary policy would start to tighten. We saw this as a consequence of an impressive, and broad based, pickup in growth. In particular, the manufacturing sector emerging from a multi-year slump (in no small part because of commodity price stabilisation) and both consumer and business sentiment significantly improving (confirmed by this week’s Eurozone PMI). The question for investors was then whether this would derail the raging bull market for equities.

From a tactical perspective, the last fortnight has thrown up two more potential skid risks. First, the oil price falling back below USD 50 per barrel on the back of rising inventories. Second, increasing concern that the “Trump trade” may end up a damp squib.

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