For markets, this is another sign that concerted tightening by global central banks is progressing. |
Historically, peaks in the U.S. rate cycle combined with rising equity volatility and a moderation in earnings momentum all signal U.S. equity performance. |
Markets are slightly vulnerable in terms of current positions. Equity markets have clearly run relatively far in relatively short order. |
Oil stocks are still not discounting as strong a backdrop for the oil price as we anticipate, so we still think there is some value in terms of the oil price. |
The caveat is liquidity and M&A activity, which is continuing to provide very strong support for the market. |
The move is significant in the sense that it signals the authorities in China are now acting to reduce rates of economic growth, despite low levels of inflation. |