Monthly Archives: April 2018
And if yes, why would that matter for an investor? Well, during a recession economic output goes down and consumers tend to buy less goods and services which generally reduce company earnings and lower earnings result usually in lower share prices. A recession in the US has usually ripple effect on other countries due to the high integration of international trade and the importance of the US as the largest economy in the world and the largest share market with around 50 % of world market capitalisation. So a sneeze in the US economy could well translate into pneumonia in the Australian economy (so the picture goes) and this could lead to a fall of Australian share prices. Australia already has underperformed world equities considerably since the GFC bottom and looks already quite weak.