The U.S. Federal Reserve has decided to keep interest rates at their highest level in nearly 22 years. Experts expect global financial markets to rally in November and December, despite the recent stock market correction and somewhat subdued investor sentiment.
Historically, November is the second best performing month after April. With some markets already down more than 10%, the potential for a big move higher in November is even more evident. This analysis follows the Fed's interest rate decision on November 1st (local time).
By refraining from raising rates, the Fed added to the market's momentum, marking the end of the most aggressive rate hike program in decades and further strengthening expectations for a year-end rally in 2023.
Nigel Green, CEO of global financial advisory firm deVere Group, highlights the historic strength of November, which is considered the second best month for markets after April. With some markets currently experiencing corrections of 10% or more, November could be an optimistic time for a turnaround.
Over the past 72 years, we've seen 34 market declines, and only 12 of them turned into bear markets. When can we typically expect a rally? A recovery typically begins 96 days after the start of a correction, and we are currently in the 90th day.
In light of the Fed's rate hike and the potential for a year-end market rally, Nigel Green outlines the key things for investors to consider
Interest rate policy: The Fed's decision to leave rates unchanged should be a positive signal for the markets, especially as its aggressive rate hike program comes to an end.
Market expectations: Investors should recognize that the market has already priced in the decision, and there shouldn't be an immediate surge in stocks.
Year-end rally: The decision to leave rates unchanged supports expectations for a year-end market rally, when markets have historically been strong.
Investment Strategies: When considering these scenarios, investors should understand the importance of diversification, risk assessment, active portfolio management, investments that are less sensitive to interest rate changes, and preparing for an extended rate hike cycle.
It is important for investors to tailor these strategies to their individual financial situation, goals and risk tolerance. A variety of factors can affect financial markets, including economic indicators, geopolitical events, and corporate performance, so it is important to stay informed and be prepared to adjust investment strategies as conditions change.
[Editor's note] The Korea IT Times editorial staff cannot guarantee the accuracy and completeness of the information contained in this article. Furthermore, this information should not be used as evidence of legal liability for the outcome of the client's stock investment.
