World Markets
Can They Break Out?
Since early May, leading equity markets have tried and failed several times to overcome their recent highs. The uncertainty about the extent and impact of the sub-prime mortgage problems in the USA, the mixed messages from the US economy and the general lack of direction during the summer holidays have all combined to restrain upward progress. The same has not been true, however, of Emerging Markets, which continued to attract foreign investors and moved into new high ground.
The overall global economic picture remains encouraging. China has revised up its 2006 GDP growth number from 10.7% to 11.1%, and there seems little reason to expect a significant slowdown this year. Upgrades continue in the Eurozone. We are, however, becoming more concerned about the USA, where there are signs that the recovery after the first quarter could be weak. Valuations remain reasonable across most markets, although in Asia they are pressing up against the top end of
