Central banks call a halt to stock markets
From the central banks came an icy shower for stock markets, with the governors of the FED and ECB reiterating that rate hikes will continue. Words that overshadowed the macro data on inflation, which continues to slow. The concern for investors now is that a prolonged tightening of rates will lead to a recession. On the bond front, yield trends seem to continue to support an end to tightening, at least in the US, by mid-2023.
In the past week, 15% of the instruments and indices used for our analysis showed a positive change. 85% experienced a negative change. Analysing by macroclass, 6% of the equity instruments and indices recorded a positive weekly change. 47% of the bond instruments and 28% of the other asset classes used for our analyses. There was a cold shower for stock markets and a more favourable trend for bonds, which seems to indicate an increased fear of a recession in the economy and a consequent reversal of monetary policy by central banks.
Improving valuations in the past week accounted for 10% of the total. The previous week, upwardly adjusted valuations were 26% of the total.
Among the equity analyses, improving valuations accounted for 11% of the total.
Among the analyses relating to the bond class, improving valuations accounted for 6.25% of the total.
In the analysis of other asset classes, improving valuations accounted for 18% of the total. These analyses included commodities, currencies and sentiment.
Of the valuations, 7.75% were above the short-term average. 30% were above the long-term average of valuations. Last week it was 12% and 32% respectively.
