Global equity markets guided by the volatility – BBH

The sharp equity loss and increased volatility seen in recent days are arguably more important than the high-frequency data in shaping the investment climate as the first quarter draws to a close, explains the analysis team at BBH. 

Key Quotes

“Testing chart-based support or technical retracement objectives may not be sufficient in themselves to provide a new low-risk opportunity.  As we did last month, we suggest waiting for a reversal pattern, which is likely to be characterized by a recovery and strong close after new lows are recorded.  At the same time, we note that ahead of the Q1 earnings reports, the largest buyers of US shares, corporations themselves, may also be sidelined.”

“There are two proximate triggers of the renewed slide in equity prices.  However, the perhaps the triggers were not needed.  Many investors were skeptical of the recovery in equity markets after the February air pocket.  The fact that the NASDAQ made new record highs, albeit marginal, is not an exception to the rule but illustrates the lack of breadth that characterized the bounce.  Most bourses in Europe and Asia barely registered the minimum of technical retracements before the news selling pressure emerged.”