Stockmarkets appear to have “left economic reality behind”, says Sam Benstead in The Daily Telegraph. Data suggests that we are heading for a massive recession, yet British and US shares are up 15% and 25% respectively since March.
Simon Macadam of Capital Economics notes that a global economic contraction of 0.5% in 2009 was enough to send pre-tax profits at the world’s non-financial corporations plunging by 45%. With a 3% global contraction expected this year, the earnings hit this time will be much worse. As of early this week, S&P 500 earnings for the first quarter were forecast to have shrunk by 16% year-on-year, with around a quarter of companies having reported as part of the ongoing earnings season, says Morgan Stanley. Yet markets seem to be looking past the current data and betting that next year will be brighter. As the bank’s Andrew Sheets puts it: “If you give investors confidence that the worst is [over], history suggests they can put up with quite a bit of bad news.”
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Revolut launches its first stocks and shares ISA with BlackRock and Vanguard ETFsA year after getting its UK banking licence, Revolut is now launching its first stocks and shares ISA with a suite of exchange-traded funds (ETFs) from BlackRock and Vanguard.
-
What does Trump’s ‘Big Beautiful Bill’ mean for the US economy?Donald Trump’s budget bill will slash taxes, but is expected to add at least $3 trillion to US national debt
-
Halifax: House price slump continues as prices slide for the sixth consecutive monthUK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
-
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
-
Pension savers turn to gold investmentsInvestors are racing to buy gold to protect their pensions from a stock market correction and high inflation, experts say
-
Where to find the best returns from student accommodationStudent accommodation can be a lucrative investment if you know where to look.
-
The world’s best bargain stocksSearching for bargain stocks with Alec Cutler of the Orbis Global Balanced Fund, who tells Andrew Van Sickle which sectors are being overlooked.
-
Revealed: the cheapest cities to own a home in BritainNew research reveals the cheapest cities to own a home, taking account of mortgage payments, utility bills and council tax
-
UK recession: How to protect your portfolioAs the UK recession is confirmed, we look at ways to protect your wealth.
-
Buy-to-let returns fall 59% amid higher mortgage ratesBuy-to-let returns are slumping as the cost of borrowing spirals.
