Current market analysis and forecasts for the fourth quarter: What impact do high interest rates have on stocks?

Current market analysis and forecasts for the fourth quarter: What impact do high interest rates have on stocks?

According to a report by e-fundresearch.com, Evan Brown, Head of Multi-Asset Strategy at UBS Asset Management, points out that current market conditions in the third quarter were characterized by a sharp rise in interest rates and a rise in oil prices. This put pressure on stock markets while the 10-year US Treasury yield rose to 2007 levels. Still, robust economic data suggests an immediate recession is unlikely. According to Beate Meyer, Head of Wholesale Central Europe at UBS Asset Management, the assessment of a soft landing scenario remains and she emphasizes the positive economic outlook, which is not being adequately taken into account due to the interest rate environment.

The outlook for the fourth quarter shows that inflation has returned and the US economy could exceed subdued expectations. While the US economy is cooling slightly, stabilization in other key regions suggests that the near-term US outlook could be somewhat cushioned.

Given these developments, UBS Asset Management prefers a neutral positioning in government and corporate bonds, while remaining overweight in equities. They expect bond yields to weaken in the fourth quarter and lead to an easing in equities.

The report shows that current market conditions pose challenges for the financial industry. Rising interest rates and rising oil prices are leading to increased risk aversion among investors. The assessment of a possible economic slowdown in the USA offers opportunities for selective investments, while stabilization is expected in other regions. The impact on the financial sector could be increased market volatility and a more selective approach to investments.