National Bank of Canada strategists are warning that global equity markets face mounting pressure despite maintaining their positive quarterly trajectory. The MSCI ACWI index continues to show gains for the quarter, buoyed by August’s recovery, but NBC cautions this advance appears increasingly fragile.
The strategists highlight two key threats undermining market stability: rising energy prices and elevated bond yields. These twin headwinds are creating a precarious environment for risk assets as traders navigate the final stretch of the quarter. The energy sector’s volatility, combined with persistent yield pressures, could quickly erode recent gains and shift sentiment.
This comes as market participants reassess positioning ahead of quarter-end, with the August rebound potentially masking underlying vulnerabilities in equity valuations. The warning particularly impacts portfolio managers and institutional traders holding significant equity exposure across developed and emerging markets tracked by the MSCI ACWI benchmark.
FXnCO Insight
Traders should monitor energy price movements and 10-year yield levels closely as breakouts in either could trigger rapid equity derisking before quarter-end.
Source: FXStreet