As borrowing costs continue to rise, experts are warning of a potential stock market correction, underscoring the widening disconnect between equities and the bond market.
Amundi‘s Chief Investment Officer, Vincent Mortier, warned that a market correction is inevitable. Mortier pointed out a shift in narratives within the equity market over the past six weeks, contrasting with bond investors’ focus on the surge in prices for commodities like diesel, petrol, and jet fuel due to Iran’s closure of the Strait of Hormuz, the Financial Times reported on Tuesday.
“We will see a correction — the question is more when than if, in my opinion,” said Mortier.
Raphaël Thuin, Head of Capital Markets Strategies at Tikehau Capital, expressed concern over the incompatibility of equities at all-time highs and high interest rates and energy markets pricing in a lasting impact on the economy. Thuin suggested that the market is due for a pause.
“Short-term, there are good reasons to be nervous,” he warned.
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