Market Trends: Fears of a global recession fading fast

Market fears of a global recession anytime soon are now all but eradicated. Resilient US economic growth, hopes of a broadening in global growth to non-US regions, artificial intelligence euphoria and rate-cut expectations are now the major drivers of the global equity rally. The only near-term debate is how quickly central banks will cut interest rates.

The major risks remaining are sticky inflation and a premature acceleration in global growth, which places renewed upward pressure on bond yields and downward pressure on increasingly stretched equity valuations.

As with global markets, PE valuations are getting a little stretched locally. Sustained further gains seem to require a decent decline in bond yields (without a recession) or further gain in forward earnings.

With a local and global economic soft landing now achievable, the outlook for earnings is encouraging – albeit expected growth over the coming year appears somewhat more subdued than for the global market overall.