The Dow Jones looks like it is breaking out of a significant consolidation period to re-continue the previous up-trend higher.
The Nasdaq appears ready to collapse through the bottom of its recent trading range.
The SP500 looks confused running from one side of the boat to the other.
While Australian equities and currency are torn between slowing global growth and high commodity prices?
Even European stocks managed a rally on the day but the bullish sentiment which seems to be constantly lurking in the background of all equity markets, really sustainable given world events and the overall economic outlook.
The International Monetary Fund (IMF) and World Bank have just downgraded their forecasts.
I did say they would be doing so after some clearly overly optimistic previous efforts. These downgrades are however in keeping with the growing view among economists everywhere that serious problems lay ahead. Not behind us. Ahead of us.
Even with consolidation or some weakness in commodity prices, they will remain highly elevated from a year ago. Gas has had a big correction but is still double where it was before the latest crises. This means that even a leveling off in inflation would leave consumers struggling as wages have not kept pace. When very late Federal Reserve rate hikes hit consumers and businesses alike, the combination of higher interest rates and inflation levels that will not be solved by such hikes, will significantly slow economic growth.
Talk of a US recession in 2024 is highly mistaken.
It is far more likely to eventuate in the second half of this year.
Slowing economic growth in the world’s three largest economies simultaneously only adds up to a more worrisome outlook for equity markets. And the commodity price boom may not be over at all. Further inflation yet again on top of the current predicament would be very ominous indeed.
Separation and individualisation of markets are likely to continue, but this could lead to greater volatility in the months ahead. Not all of it was good.
Market insights and analysis from Clifford Bennett, Chief Economist at ACY Securities
