"That said, fears on this front had abated by the week-end following signs that Israel and Iran were stepping back from any further escalation. Indeed, oil prices ended the week down 5 per cent.
"The correction in equities, however, is also a result of expectations for a soft landing, which had been increasingly priced into markets, now starting to be replaced by talk of ‘no landing’.
"Namely, the idea that while there is no imminent recession in prospect, inflation will prove somewhat sticky without one and not allow interest rates to fall half as far or fast as had been hoped.”
Since Thompson made those comments, equity markets have rallied as the geopolitical threats appear to have modified, showing the extent to which macro events continue to drive markets.
David Thorpe is investment editor at FT Adviser
