World markets falling again with echoes of the 2018 rout

World markets falling again with echoes of the 2018 rout

Stocks















Bloomberg

The feel-good days for global markets at the end of March are firmly over.

Everything from stocks to bonds is falling — even oil has pulled back from near records — in a concerted cross-asset selloff with echoes of the rate-spurred rout of October 2018.

Blame it on a Federal Reserve intent on restricting policy to tamp down the worst inflation in four decades, even if that threatens economic growth. Unlike four years ago, when Chair Jerome Powell faced market upheaval that would eventually force him to reverse policy, investors in recent weeks have been subject to one Fed official after another pledging higher and higher rates.

With monetary support rapidly receding and recession risks rising, investors are hunkering down. Companies resilient to an economic slowdown such as health care are back in favour. Ditto cash and dividend-paying stocks. Meanwhile, demand

for hedging is creeping up in the

options market.

“The common denominator in each case is the fear of recession, which has superseded the textbook effect of rising interest rates,” said Robert DeLucia, senior economic adviser at Empower, a retirement services company. “We are seeing a stampede into defensive stocks