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Oliver's Insights - Correction time for shares?

 

Shane Oliver, Head of Investment Strategy and Chief Economist.

The attached note looks the pullback seen in US shares last week and the implications going forward. The key points are as follows:

  • The US share market is long overdue a decent correction. This now appears to be unfolding and may have further to go as higher inflation, a slightly more aggressive Fed and higher bond yields are factored in.
  • This will impact most share markets including Australian shares.
  • However, in the absence of an aggressive 1994 style back-up in bond yields or a US recession - neither of which we expect - the pull back in shares should be limited in depth and duration to a correction (with say a 10% or so fall) and shares should have positive returns this year as a whole.
  • However, it's likely to be a more volatile year than last year.

 

Oliver's Insights - Correction time for shares? Oliver's Insights - Correction time for shares? (234 KB)  




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