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A major help to equity markets since the start of 2023 was a US economy performing better than expected. We can see this in the chart below. The economic surprise indices tell us how an economy is performing relative to forecasts. When it is above zero it is doing better and vice versa when below zero.
As you can see in the chart below, the US (the navy line) has been at or above zero since the fourth quarter of 2022. The other major regions have had good periods and bad periods during that time. The picture evolving now is all the major regions heading below zero. The last time this happened was at the beginning of the second quarter of 2022 and the subsequent two quarters were a very tough time for equity markets. However, there is a major difference this time. In 2022, the European Central Bank and the Federal Reserve were raising interest rates, compounding the problem of a slowing economy. This time round they are in interest rate cutting mode, which could be accelerated if the data continues to weaken. This can offset the impact of slower economic growth on equity markets. Consequently, the indices dropping below zero is a concern, but not yet a worry.