He said: “Oil is now at $43 a barrel, and with the benefits coming in as the northern hemisphere hits winter – people having to pay less to fill up their cars and heat their houses and so on – it will be helpful for consumer confidence. The US growth profile will come through the second half of this year reasonably well, and that should act as a stabilising influence on markets.
“The equities sell-off is not without substance, but it is a bit of a panic – people needed excuses for a bit of drama after good gains, and a healthy correction was needed. That does not mean that we should not expect more volatility, but US consumer confidence is healthy and fundamentally the world economy is not forecasting a recession.”
David Stubbs, global market strategist at JP Morgan Asset Management, said that while there are many influences on markets, impending Federal Reserve interest rate hikes are currently putting US economic data in the investment limelight.
“It is difficult to look at just one indicator of global growth,” he explained. “Each area has a few different indicators to watch.
“That said, the biggest global debate at the moment is whether the US economy is strong enough for an interest rate rise, and to work out what is going on, you need to be looking at high-frequency indicators that you can trust.”
Stubbs continued: “US jobless claims figures come out every Thursday and are at historic lows – any deterioration of that would be a bad sign. We also have the employment report coming out next week, which is the biggest data release in the world, and we will the get the one after that before the next Fed meeting.
“Even with markets behaving in this erratic way, if that data, as well as GDP and inflation figures, comes out strong, then we may see a rate rise in December.”
Clearly economic data takes precedence for some, but for others, such as Dan Kemp, EMEA Morningstar Investment Management Europe CIO, it is about keeping watch over asset prices.
