Azimut Investments - Market Insights

Since mid-October, a mighty rotation has taken place in financial markets, bringing a reversal (or perhaps just a temporary retracement?) of many of the major trends that have characterized the year so far.

Beginning in the second half of October, financial markets began to rebound after September's steep correction, fueled by growing hopes that the famous and long- awaited pivot by central banks might actually materialize

Political events have continued to be the driver of financial markets in recent weeks.

In the previous report we had extensively argued about 1) how the risk of recession had risen significantly considering that the Fed reiterated its stance to induce one in order to bring down inflation, 2) how market multiples (particularly the Nasdaq) had not fallen enough in light of the surge...

After the stronger-than-expected 75 basis points hike and the hint that additional supersized hikes might follow in upcoming meetings, the market had thought for a few days that the torch of the most hawkish central banker had passed to Lagarde.

If you ask investors what financial dynamics characterized 2022 the most, many will probably say the evolution of interest rates, commodity volatility, the joint decline of equities and bonds that made mixed asset funds unbalanced, or the stock market correction, particularly in growth stocks.

As the title of the previous report suggested, expectations of a dovish pivot by central banks turned out to be just a fairy tale.

The long-awaited rebound has finally arrived, driven by central banks or, more likely, by the market's interpretation of what Lagarde and Powell said during the press conference following the central bank meetings.