{"id":519441,"date":"2010-04-07T14:36:00","date_gmt":"2010-04-07T18:36:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:419977"},"modified":"2010-04-07T14:36:00","modified_gmt":"2010-04-07T18:36:00","slug":"rate-hikes-not-huge-risk-to-stocks","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/519441","title":{"rendered":"Rate hikes not huge risk to stocks"},"content":{"rendered":"

The inevitability that interest rates will rise and choke off the economic recovery is making some equity investors incredibly uneasy these days. <\/p>\n

While that's understandable, it's overdone to expect a major correction just because global central banks are set to tighten ultra loose monetary policy in the coming months, says Stephen Freedman, a strategist at UBS AG.<\/p>\n

"We conclude that while monetary policy is likely to keep markets in a state of uncertainty for several quarters, it need not prevent equity markets from posting at least moderate gains," Mr. Freedman said in a note to clients.  <\/p>\n

Owing to the uncertainty surrounding rate hikes, the strategist recently downgraded his recommendation on equities to Neutral from Overweight. At the same time however, he does not believe the  onset of monetary tightening adds significant risk to stocks.<\/p>\n

Based on his analysis since 1950 on how equities have performed around the beginning of a U.S. Federal Reserve tightening cycle, Mr. Freedman said stock markets perform better than average during the six months leading to the beginning of tightening.  By comparison, during the six months and one year after the policy change, stocks have performed in line with their long term averages. <\/p>\n

Furthermore, although 12-month returns are best when monetary policy is tight and loosening, gains have still remained positive when policy is loose and tightening. <\/p>\n

"The phase that is relevant for the foreseeable future, loose monetary policy and tightening, results in stock returns broadly in line with long term averages," he wrote.  <\/p>\n

"In other words, the fact that the Fed embarks on a hiking cycle is not on its own enough to derail equity markets."<\/p>\n

David Pett <\/a><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The inevitability that interest rates will rise and choke off the economic recovery is making some equity investors incredibly uneasy these days. While that's understandable, it's overdone to expect a major correction just because global central banks are set to tighten ultra loose monetary policy in the coming months, says Stephen Freedman, a strategist at […]<\/p>\n","protected":false},"author":4060,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-519441","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/519441","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4060"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=519441"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/519441\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=519441"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=519441"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=519441"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}