Market correction not reflective of strong fundamentals

Here's what we're thinking

Written by Lynn Healy-Goulet
February 13, 2018

Following a strong start to the year, global equity markets have experienced a sharp bout of volatility in recent days that wiped out much of January’s gains. While investor concern is normal during episodes of extreme market movements, we believe this latest bout of selling was overdue given the last market decline of just 5% or more occurred more than 18 months ago and the recent run-up in markets left market positioning unbalanced and thus vulnerable to a short-term correction. However, the medium-term outlook for markets remains constructive, in our view, underpinned by solid economic fundamentals and still-supportive policy settings. In particular, global economic growth remains at multi-year highs with recent data releases pointing to further forecast upgrades for 2018 in coming months.

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