This global sell-off is not the start of a bear market

The current global sell-off is unlikely to be the beginning of a bear market, more likely noise that we will forget about soon, affirms the world’s leading independent financial advisory organisation.

The comments from Tom Elliott, deVere Group’s International Investment Strategist, come as global shares fell back on Wednesday, echoing a sell-off on Wall Street prompted by concerns over slowing growth and falling profits.

Mr Elliott states: “U.S. markets have been rocked by bond yields and corporate earning concerns.  This rattled investor sentiment has now rippled across the global markets.

He continues: “Wall Street has been hit by a combination of three key factors.

“First, the U.S. 10-year Treasury yields reaching 3 per cent. This is now quite a decent yield relative to inflation of just over 2 per cent, and cautious investors may switch out of stocks into Treasuries as a result. 

“The second reason is growing feeling that the U.S. economy is peaking in its current cycle, echoed today by Caterpiller’s earnings statement that said Q1 would be the ‘high water mark’ for the year. 

“Third is a sense that U.S. big tech is facing a storm of different problems, from greater regulation on privacy issues, to lacklustre sales of products, and perceived political vendetta by the Trump administration towards some firms, such as Amazon.”

Mr Elliott concludes: “Despite this current global sell-off, this is unlikely to be the beginning of a bear market. It is more likely noise that we will forget about soon.

“Fundamentals of strong corporate earnings growth, possibly growing over the coming 12 months thanks to Trump’s tax cuts, is very supportive.”