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Debt ceiling in focus

In May, we witnessed a mixed performance in the global stock markets. The focus was on the debt ceiling issue in the United States, but eventually, a solution was reached, resulting in the lifting of the ceiling.

Global Stocks Rise Amid Recession Fears

The global stock markets continued to rise in April, as concerns about the banking crisis gradually subsided. Fear of recession is still a topic for many market players.

Banking crisis caused fear

The global stock markets defied the banking crisis and rose in March. One of the contributors to this upturn was the decline in interest rates due to liquidity provided by central banks.

New, higher interest rate peak

The world’s stock markets fell slightly due to the likelihood of a new, higher interest rate peak. This has proven to be the drawback to the heightened optimism and waning fears of recession.

Has inflation peaked?

The consensus is that we can expect a «soft landing» in 2023 and that inflation will peak. The central banks have therefore signalled a slower pace of interest-rate hikes.

Tighter central bank monetary policy

In the second half of August, the markets fell back to their end of July levels. This was apparently driven by the signals from the annual Jackson Hole symposium, where the chair of the US central bank was clear about combating inflation.

The stock exchanges defied weaker macro figures

Globally, the long-term interest rates responded to weaker growth impulses and fell sharply in July. The stock markets, on the other hand, jumped up, quite clearly driven by interest-rate-sensitive growth shares.

The central banks’ dilemma

Fears of a recession are increasing as a result of rising inflation and interest rates. Inflation has remained high, driven by an extremely strong labour market, high commodity prices and delays in global supply chains following the pandemic. The war in Ukraine and China’s handling of Covid-19 have further worsened the supply problems.

Lower growth outlook

Increasingly hawkish central banks and consumption hit by higher energy and food prices have led to the fear of recession rising significantly. At the same time, economic growth is higher than the trend growth and the labour market is strong.