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Tech sector valuations may have even further to fall

Even though the valuations of technology stocks have, in general, already fallen sharply in recent weeks, we suspect they may decline further over the next couple of years. This is one reason why we expect the sectors in which they are heavily represented to make limited gains, at best, over that period.
Thomas Mathews Markets Economist
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Markets are creaking but not (yet) breaking

So far, the sell-off across bond and equity markets this year has not triggered major signs of systemic risk. If that were to change, central banks would probably have to step in to prevent a destabilising cycle of panic selling and money market distress from taking hold, even if such as step would to some extent clash with their plans to tighten monetary policy further. This publication takes stock of the various signs of stress across the global financial system. We intend to update the analysis periodically while the current market turmoil continues. In view of the wider interest, we are making this Stress Monitor available to clients of our Global Markets, FX Markets, and Asset Allocation Services.

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Earnings may be the next headwind for the S&P 500

Despite its struggles yesterday, we think the S&P 500 may have some way further to fall as the economy slows and more companies struggle to meet optimistic earnings expectations. Note: We’ll be discussing the markets outlook in light of Wednesday’s sell-off in a 20-minute online briefing on 19th May at 10:30 ET/ 15:30 BST. Register now.

19 May 2022

Global Markets Update

Bear markets, monetary tightening and the S&P 500

The current struggles of the S&P 500 don’t have much in common with most previous “bear markets”, but we still think one is likely as the Fed presses ahead with monetary tightening.

18 May 2022

More from Thomas Mathews

Capital Daily

China’s property sector, monetary policy, and exchange rate

With China’s property sector – and economy more broadly – struggling, we think more PBOC rate cuts are on the way this year, which we expect to result in further falls in the country’s government bond yields and a weakening of its exchange rate.

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Global Markets Update

Fed tightening may limit gains in US equities

While we don’t think the stock market’s falls this week mark the start of a sustained rout, we do expect Fed tightening to curb the upside for mid- and large-cap US equities over the next couple of years. And tighter monetary policy might also weigh a bit more heavily on them than on equities elsewhere.

7 January 2022

Capital Daily

Omicron and the latest fall in the stock market

If worries about the spread of Omicron abated, stock markets would probably recover some of the ground they’ve lost recently. Nonetheless, we wouldn’t expect that to mark the beginning of another big rally.

20 December 2021
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