David Bulteel

“Having said that equity markets were vulnerable to profit-taking, volatility returned with a vengeance over the last week. So far, the correction is similar to last May and other episodes in 2004-5 – indiscriminate selling, with similar falls across a range of stocks and markets, unconvincing bounces and renewed falls. However, inflation is now less of a concern so, if growth stalls, Central Banks will be able to ease. Economic data remains consistent with our soft landing scenario. Markets will hang on every release but the explanation for their reaction will lie more in changing risk aversion than changing fundamentals.”