Australian shares to open higher. European stocks rose in the first trading session of the year on Monday. $A 68¢. Bitcoin $US16,716. Follow for updates.
US equities are a reliable barometer of the health of the world’s largest economy, and stocks tend to recover before recessions run their course.P 500 fell 19.4 per cent. The Nasdaq lost 33.1 per cent and the Dow Jones Industrial Average slid 8.8 per cent as the US Federal Reserve increased interest rates seven times to its present range of 4.25 per cent to 4.5 per cent from nearly zero.
Capital Group’s analysis of 11 US economic and market cycles since 1950 found recessions have ranged from two to 18 months, with the average downturn lasting about 10 months. “While each recession is painful in its own way, one potential bright spot is that they don’t historically last very long,” the investment manager said.“What’s more, stock markets usually start to recover before a recession ends. Stocks have already led the economy on the way down in this cycle, with nearly all major equity markets entering bear market territory by mid-2022.Capital found bull markets had an average total return of 265 per cent, and bear markets lost 33 per cent.
“The strongest gains can often occur immediately after a bottom. Therefore, waiting on the sidelines for an economic turnaround is not a recommended strategy,” the manager said.
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