Since April, US equities have corrected significantly. The Dow Jones Industrial Average has fallen for eight consecutive weeks for the first time in 90 years, while the Nasdaq Composite Index, which is composed of many growth stocks, has entered an adjustment phase, having fallen around 30% from its high. We would attribute these corrections to valuations adjustments associated with rising interest rates in the US.
Higher global inflation, concerns about the pace of US monetary policy, as well as caution about economic conditions, have led to a strong sense of uncertainty around the equity markets. High market volatility may persist for some time.
Japanese equities have performed relatively well against the global downward trend. We think that this outperformance has been based on lower valuations as well as expectations of corporate earnings growth supported by a weaker yen.
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pdf AMO Insight US Stock Market Adjustment and Japanese Equities
Written by Takeru Ogihara, Chief Strategist, Asset Management One Co., Ltd.
03 June 2022