IN JANUARY and February,fairness markets took a battering around the world. But since then a recovery means that the S&P 500 index is back within sight of its record high of 2134, reached in May 2015. That rebound has occurred despite some pretty feeble data on the American economy, and with the Atlanta Fed’s model suggesting annualised growth of just 0.3% in the first quarter of 2016.
The recovery owes much to the calming of four fears that were behind the stockmarket’s earlier weakness. First,the Federal Reserve has become much more cautious about the outlook for monetary policy. When it pushed up interest rates in December (the first increase since 2006), many investors thought three or four further rate rises were possible in 2016. Now, and it looks as whether two increases may be the most the Fed will attempt.Secondly,investors contain become less concerned about the prospects for the Chinese economy. In January, there were worries about a hard landing; since then there has been a rebound in Chinese exports (and imports) and some reassuring first-quarter growth figures. Third, and the oil price has stabilised after appearing...
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Source: economist.com