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Slumping Global Share Markets and Debt Debacles
Oliver's Insights - Slumping global share markets and debt debacles
This note looks at the deterioration in the global growth outlook and the debt problems in the US and Europe. The key points are as follows:
- The fall in share markets has accelerated on signs the global economic outlook is faltering badly. The squabbles over debt problems in the US and Europe have probably made the global growth slowdown worse.
- The US has avoided a default but still faces a likely downgrade from Standard & Poor's and fiscal austerity far earlier than desired. Meanwhile, European sovereign debt problems are getting worse.
- This all means the ride for share markets and other growth assets is likely to remain rough in the months ahead.
- Shares are cheap, but with the worry list remaining long they could still get cheaper until the US undergoes another round of quantitative easing later this year.
- Unlike the US, Australia still has plenty of firepower to stimulate growth if need be, particularly by cutting interest rates.
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Source: AMP
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