Stock Markets Start Year on Positive Note

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2022 was one of the most challenging years for the stock market following 2008’s significant declines. Stocks are looking brighter at the start of 2023, and many investors are anxious about what the global economy will bring.

Nasdaq reported that the Asia-Pacific equity markets had mixed outcomes on the first trading day of the year. South Korea’s KOSPI declined 0.31%, and Australia’s ASX All Ordinaries fell 1.25% on weakness in Energy Materials. India’s Sensex gained 0.54%, Taiwan’s TAIEX advanced 0.61%, China’s Shanghai Composite was 0.88% higher, and Hong Kong’s Seng rose 1.84%,” as noted by Nasdaq contributors Chris Versace and Mark Abssy.

Wayne Duggan, a contributor for Forbes Advisor, reported that “The first few months of 2023 will likely be a critical period for the economy. While inflation appears to be trending downward, analysts and economists are concerned it may prove stickier than the market is anticipating.”

Duggan added that analysts expect a growth slowdown in the Q4 earnings season to be reported in mid-January. Independent Advisor Alliance chief investment officer Chris Zaccarelli states that slowdowns in spending and economic growth are suitable for inflation. However, it has an inverse effect on the stock markets.

Zaccarelli added that “At this point, the market has been backed into a corner since more robust spending and higher growth is indirectly bad for the stock market because it is likely to trigger an even stronger hawkish reaction from the Fed, while slower spending and growth is directly bad for the stock market because it implies lower corporate earnings.”

Experts recommend that investors be on the lookout and take advantage of reducing exposure to stocks and increasing their cash holdings as the interest rates continue to rise. Zaccarelli added that investors take a conservative approach to the market at this point but continue to stay invested as the market can turn at any time. Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, also recommended being patient and focusing on riding out the storm, adding that investors should sell profitless and high-multiple stocks as these types of stocks don’t perform well in a recession.

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