Investment Clock insights

Market sell-off doesn't come as a surprise


Trevor Greetham

30 January 2018

Global stock markets dipped on Tuesday on concerns about rising US interest rates and high equity valuations. 
 
This sell-off doesn’t come as a surprise. Investor sentiment has been getting very frothy, with our composite sentiment indicator hitting its highest reading since March 2017 this week - see Chart 1. 
 
The recent increase in share prices has been powered by the prospect of large corporate tax cuts in America so it’s noteworthy that US company directors have started to sell shares in their own companies in large numbers. 
 
With expectations running high, we think the sell-off may have further to run and we reduced our exposure to equities in our multi asset funds yesterday, although we still remain overweight stocks. 
 
With the world economy strong and interest rates low, we would probably buy a more pronounced dip.

Chart 1.

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