If history is any indicator of the future, the first two weeks of July could bring relief to investors after a bruising first half of the year, a report by Reuters.
As per the report, World stocks have shed more than $20 trillion in value since hitting record highs in January. Most major markets are firmly entrenched in the bear market territory as policymakers struggle to check soaring inflation without crushing fledgling growth.
However, half-month price changes since 1930 figures show that the first two weeks of July have historically offered the best returns of the year for S&P500, it pointed out.
After three consecutive quarters of declines for S&P 500 stocks, with the index declining 20 percent since the beginning of the year, some investors told Reuters that they are ready to buy the dip. The S&P 500 has edged up 0.16 percent so far this month.
While volatility continues to be a drag for global stocks, a JPMorgan survey showed two-thirds of investors are likely to increase their equity exposure in July, the report stated.
History offers grounds of short-term hope amid a bleak backdrop for stocks, Paul O’Connor, head of multi-asset at Janus Henderson Investors told Reuters, adding "we see record shorting, we see a really big equity rebalancing happening, probably... in Europe and the U.S. Naturally just rebalancing because we've had such a big drop in equities."
Amid the current environment, UBS suggests using the equity sell-off and volatility to selectively build longer-term positions, Reuters noted.
It said value stocks including energy and UK equities could continue to outperform, especially if confidence rises that corporate earnings can stay resilient. But market participants advise caution, anticipating a stormy few months ahead for risk assets, amid rising interest rates and economic growth concerns.
