Overseas and domestic equity markets have continued to recover from a loss of confidence in January/February. The outlook is for continued global growth at a relatively slow rate, with a range of downside risks, and with only modest prospects for global corporate profits. Many asset classes look expensive against this backdrop, largely due to cash and bond yields remaining very low and now looking to stay at very low levels for longer than previously thought. The New Zealand economy is still growing at a respectable rate, but recent data suggests the strength of the cycle is waning, and the recent strong performance of local equities will be challenged by likely slower growth ahead.
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