Despite Wednesday’s bounce, stocks are finding it hard to maintain their recent strong run.
Risk assets wobbling in afternoon trading
“It looks like this relief rally is beginning to run out of good news. After a solid earnings season so far, stocks are facing a period where the sheer number and also the profile of those stocks reporting are beginning to decline. Fundamentally, the dip buying over the past month has been valuation-based, and with earnings estimates for coming quarters still heading lower stocks are rapidly running out of room for more gains. Recession concerns seem to be returning too, a point underlined by the Bank of England’s comments in its meeting today.”
UK faces a tough few months
“UK stocks have enjoyed a decent bounce off the lows, but Andrew Bailey and co are clearly worried about the economy, and now expect a recession and two years of negative income growth. The pound’s slump in the wake of today’s MPC decision underlines the caution investors have regarding the UK economy, and suggests that the pound’s miserable performance thus far in 2022 is unlikely to change for the time being.
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