Liontrust Multi-Asset Quarter in Review - Flipbook - Page 3
Recession fears dominate in worst first half for equities in
half a century
• S&P 500 index down over 20% in the first six months of 2002, in
worst start to a year since 1970.
• Economic growth appears to be moderating but an inflection
point in inflation is yet to follow.
• Beyond geopolitics and outbreaks of Covid, the key questions
this year and beyond are when we will see peak hawkishness
from central banks and how successfully they can engineer a soft
landing while also curbing inflation.
• We continue to believe inflation should start to fall in the second
half of the year as rolling base effects from Covid shutdowns work
through the system, although – to state the obvious – the higher it
climbs, the longer it could take to fall.
• These banks are living up their name and playing a central role
in markets, with rate hiking activity dominating sentiment. The US
Federal Reserve pushed through a 0.75% hike in June, the largest
since 1994, and the same is expected in July.
• Work from the World Bank has compared the current state of the
global economy with the stagflation-blighted 1970s.
• Other central banks continue to follow suit, with five rises from the
Bank of England since December and the European Central Bank
hiking for the first time since 2011 in July.
The S&P 500 index down over 20%
in first six months of 2002, in worst
start to a year since 1970
• Concerns are rising around slowing growth but we feel a
technical, ‘small R’ recession (two consecutive quarters of negative
growth) is more likely than a ‘real’ recession, where a protracted
slowdown emerges.
The Federal Reserve pushed through
0.75% hike in June, the largest since
1994, and the same is expected in July
We feel a technical, ‘small R’ recession is
more likely than a ‘real’ recession, where
a protracted slowdown emerges
Liontrust Multi-Asset Funds and Portfolios Quarterly Report: Q2 2022 - 3