{"id":711136,"date":"2010-04-07T14:36:00","date_gmt":"2010-04-07T18:36:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:419977"},"modified":"2010-04-07T14:36:00","modified_gmt":"2010-04-07T18:36:00","slug":"rate-hikes-not-huge-risk-to-stocks","status":"publish","type":"post","link":"https:\/\/mereja.com\/index\/711136","title":{"rendered":"Rate hikes not huge risk to stocks"},"content":{"rendered":"<p>The inevitability that interest rates will rise and choke off the economic recovery is making some equity investors incredibly uneasy these days. <\/p>\n<p>While that&#39;s understandable, it&#39;s overdone to expect a major correction just because global central banks are set to tighten ultra loose monetary policy in the coming months, says Stephen Freedman, a strategist at UBS AG.<\/p>\n<p>&quot;We conclude that while monetary policy is likely to keep markets in a state of uncertainty for several quarters, it need not prevent equity markets from posting at least moderate gains,&quot; Mr. Freedman said in a note to clients.&nbsp; <\/p>\n<p>Owing to the uncertainty surrounding rate hikes, the strategist recently downgraded his recommendation on equities to Neutral from Overweight. At the same time however, he does not believe the&nbsp; onset of monetary tightening adds significant risk to stocks.<\/p>\n<p>Based on his analysis since 1950 on how equities have performed around the beginning of a U.S. Federal Reserve tightening cycle, Mr. Freedman said stock markets perform better than average during the six months leading to the beginning of tightening.&nbsp; By comparison, during the six months and one year after the policy change, stocks have performed in line with their long term averages.&nbsp;<\/p>\n<p>Furthermore, although 12-month returns are best when monetary policy is tight and loosening, gains have still remained positive when policy is loose and tightening. <\/p>\n<p>&quot;The phase that is relevant for the foreseeable future, loose monetary policy and tightening, results in stock returns broadly in line with long term averages,&quot; he wrote.&nbsp; <\/p>\n<p>&quot;In other words, the fact that the Fed embarks on a hiking cycle is not on its own enough to derail equity markets.&quot;<\/p>\n<p><a href=\"mailto:dpett@nationalpost.com%20\">David Pett <\/a><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/network.nationalpost.com\/NP\/aggbug.aspx?PostID=419977\" width=\"1\" height=\"1\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The inevitability that interest rates will rise and choke off the economic recovery is making some equity investors incredibly uneasy these days. While that&#39;s understandable, it&#39;s overdone to expect a major correction just because global central banks are set to tighten ultra loose monetary policy in the coming months, says Stephen Freedman, a strategist at [&hellip;]<\/p>\n","protected":false},"author":2571,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4821],"tags":[],"class_list":["post-711136","post","type-post","status-publish","format-standard","hentry","category-news"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9NivD-2YZW","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/posts\/711136","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/users\/2571"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/comments?post=711136"}],"version-history":[{"count":0,"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/posts\/711136\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/media?parent=711136"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/categories?post=711136"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/tags?post=711136"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}