Outlook for Investment Markets
Investment markets are adjusting to the probability that the U.S. is about to start raising interest rates, which will have implications for valuations across many asset classes. The unexpectedly large falls in oil and other commodity prices, and potential further falls, are also impacting across a wide range of assets. In coping with these changes, it has helped that economic performance in the developed economies has been reasonably good, and looks to improve a little more next year, though some important emerging economies (notably Brazil and Russia) are struggling. In New Zealand, the Reserve Bank of New Zealand has cut interest rates as inflation has remained below its target, and recent data indicate an ongoing pickup in business activity. The economic outlook for 2016, while positive, is, however, overshadowed by some significant risks: China's likely growth, the impact of El Niño, and commodity rices.
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