Market declines largely “sentiment-driven” but fear could turn self-fulfilling

The S&P 500 fell 2.2 percent last week after a five-day losing streak.

Some analysts think that slowing global growth will weigh on markets.

Hubert de Barochez, economist at Capital Economics, noted that the weak employment report on Friday “provides further evidence that the U.S. economy is starting to falter”.

He added that “with growth elsewhere also likely to remain weak, we think that equities in the U.S. will fall this year, dragging down most stock markets across the globe”.

However, other analysts remain sanguine.

Candice Bangsund, portfolio manager at Montreal-based Fiera Capital, suggested that the deterioration in economic momentum seen in early 2019 has been largely “sentiment-driven”.

“Our expectation is that global growth is going to find a bottom here in the first half of 2019 and reaccelerate,” she said.

Putri Pascualy, managing director at Paamco, said that the global economy is still growing and suggested that “this is more of an issue that there’s nothing to fear but fear itself”.

Still, Yale University economics professor and Nobel laureate Robert Shiller suggested that that fear could be self-fulfilling.

“A lot of people have that on their mind, and they think it's got to turn soon. I'm kind of with that. You know, if people think that, they're going to make it happen,” he said on CNBC last week.