Outlook for Investment Markets
Equity markets have staged a strong recovery from the sharp sell-off of January/February, although in most cases, the recovery has not yet clawed back all of the earlier losses. Investors appear to have become less nervous about a range of risks (the global economy, U.S. monetary policy, China, emerging markets, the impact of low oil prices, banking sector stress). Overall, the global outlook is for further slower-than-usual growth in the world economy, albeit with downside risks, which could yet provoke further periods of volatility. In New Zealand, the central bank has unexpectedly cut interest rates, which has boosted the outlook for corporate profitability in an already well-performing economy, although there is potential for adverse spillover effects from low (and still falling) dairy prices.
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