Outlook for Investment Markets
World equity markets hit turbulence in late August and early September, principally on growing concerns about slower growth and financial stresses in China. While equity markets have the benefit of ongoing economic growth, somewhat expensive valuations mean that they will remain vulnerable to similar episodes of volatility. One particular challenge in coming months will be the progressive normalisation of monetary policy in the US and the UK. At home, the economy is growing more slowly, and the Reserve Bank has cut interest rates and will likely cut them again this year. After its earlier large depreciation, the currency may now be stabilising.
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