The Feds Interest Rate Reduction Game Period Starts Global Stock Markets or Sits on Short-Term Dividends

category:Finance
 The Feds Interest Rate Reduction Game Period Starts Global Stock Markets or Sits on Short-Term Dividends


Earlier this month, ECB Governing Council Ryan said the ECB was ready to take further action if necessary. He stressed that the ECB should be prepared for a stronger and longer economic slowdown and prepare for the worst. If necessary, the ECB could change its forward-looking guidelines, cut interest rates and resume quantitative easing.

In addition, last week Lagarde, the current president of the International Monetary Fund (IMF), was nominated to replace Draghi as president of the European Central Bank. Judging from Lagardes past remarks, he prefers loose monetary policy, which will continue to boost risk appetite in global markets.

Industry experts point out that, in fact, investors have some misunderstandings about the impact of Fed policy on the stock market. In fact, the stage of real stock market performance is not after the beginning of the interest rate reduction cycle, but the game period between the interest rate increase cycle and the interest rate reduction cycle. During this period, the major stock indexes in the world tend to perform brightly.

However, contrary to some investorssubjective understanding, commodities outperformed bond markets, bond markets outperformed stock markets, especially the major stock indices, and emerging markets outperformed developed markets after the beginning of the full easing cycle.

Goldman Sachs explained that risky assets have fallen more or risen less in previous easing stages, mainly because the downward pressure on macroeconomic and corporate earnings fundamentals at this stage is actually greater, and these pressures have a greater negative impact on risky assets than the offset effect of short-term interest rate downward. Historically, the US stock market tends to perform relatively well a year after the Feds interest rate hike, followed by variables.

Source: Yang Bin_NF4368, Responsible Editor of China Securities News and China Securities Network