Concerns over Spain, high oil prices and the speed of an economic slowdown in China will lead to a shift in investor sentiment in the second quarter, prompting a pause in the rally that saw markets climb to multi-year highs in the first quarter of 2012, analysts said on Monday.
“I expect to see a little bit of a slowdown with the U.S. data. From China we have a bit of inconclusive GDP information as well. Clearly PMI has been quite solid but you’re talking about a slowdown in growth,” Ana Armstrong, CEO of Armstrong Investment Managers, told CNBC on Monday, the first trading day of the second quarter.
“We still have a euro zone situation (that is) not completely resolved,” she said. “So we think that the whole risk rally can get a bit of a break.”
The Dow Jones Industrial Average and the S&P 500 logged their best quarters in 14 years in the first quarter of 2012, while the Nasdaq had its best first-quarter performance since 1991.
Meanwhile European stocks marked their best first quarter since 2006, and a number of Asian markets also ended the quarter on multi-year highs.
Analysts at Barclays agree that markets will lose steam after the strong rally.
“The equity market uptrend in place since the beginning of this year looks to have petered out for now,” they said in a note to clients on Monday.Page 1 of 3 | Next Page