Market Update: Correction time for shares?

This article looks at the pullback seen in US shares and the implications going forward. The key points are as follows:

  • The US share market is long overdue a decent correction. This now appears to be unfolding as higher inflation, a slightly more aggressive Fed and higher bond yields are factored in.
  • This will impact most share markets including Australian shares.
  • However, in the absence of an aggressive 1994 style back-up in bond yields or a US recession – neither of which we expect – the pull back in shares should be limited in depth and duration to a correction (with say a 10% or so fall) and shares should have positive returns this year as a whole.
  • However, it’s likely to be a more volatile year than last year.

View the full article by Dr Shane Oliver Head of Investment Strategy and Chief Economist AMP Capital via the following link: