Breaking the bad news cycle

This monthly commentary gives a roundup of global markets and trends.

In this edition:

After a poor performance in 2022,  share prices have rallied this year on easing recession concerns. There are several reasons why stocks could defy the bad news associated with recession:

• Momentum - in early June the US S&P 500 was up 20% from its low point in October 2022, marking a new bull market. The average bull market lasts 5.5 years¹
• Covid-era policies provide support – it’s estimated that households have plenty of unspent funds left over from Covid. In developed economies, these range from 6% of GDP in the US, 7% in the Eurozone, 8% in the UK and 9% in Japan²
• Dollar depreciation – we have a negative outlook for the US dollar – a weaker US dollar, when accompanied by global growth, is usually positive for financial assets

Sources:

¹ Refinitiv/Evelyn Partners

² Citi, How Much Firepower Do Consumers Have Left in DM Economies?, 5 May 2023