Does an Economic Downturn Impact Markets?

Morningstar Investment Management's Mark Preskett says that investors who sell growth assets over recession fears may be being hasty

Mark Preskett 5 February, 2019 | 8:04AM

New York, USA

One of the narratives from the recent market downturn was the growing risk of a global recession. Following around 10-years of economic expansion, the US saw consumer confidence soften, equities slide, and corporate profits disappoint to close out 2018. China, meanwhile, caught headlines as it posted its slowest economic growth since 1990, albeit at a healthy rate of 6.6%, with many CEOs there sharing their concern over the economy. And in Europe, of course, Brexit and other geopolitical uncertainty has the continent on edge.

Most of the questions voiced thus far are: 1) What might cause the global economy to slow considerably or enter a recession? 2) How severe could a downturn be? For investors asking these questions, the logic is presumably that if economic growth is at risk, you might consider selling growth assets. However, for investors with long-term goals, we think this approach may be short sighted.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Mark Preskett  is a Senior Investment Consultant & Portfolio Manager for Morningstar UK                       

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites