Next year promises to be a better year for equities than 2015, when markets were rattled by much weaker-than-expected growth in emerging markets. But there is a positive side to this weakness that will come through in price developments. In 2016, consumption in the developed world – particularly the US – will likely show significant strength, partly because of wage and employment growth, but also because the prices for many goods and services are falling.
The outlook for economic growth in 2016, particularly in the developed world, is therefore much healthier than at the start of 2015, which creates a positive backdrop for equity markets, especially in the US. Yet careful analysis remains crucial as innovation stocks augment their leadership in the face of the many disruptive forces that are changing the shape of global equity markets