Global equity markets are entering a period of heightened uncertainty as summer trading begins, with strategists warning that the recent rally driven by investor enthusiasm may be giving way to traditional seasonal volatility.
The shift in sentiment is underscored by a notable reversal in capital flows, as US equity mutual funds and ETFs recorded their first net outflows since March.
This break in the relentless buying pressure suggests that market participants are becoming more cautious about near-term returns.
JPMorgan has issued a cautionary outlook for global equities, arguing that the market is heading for a traditional summer downturn.
The bank’s strategists point to the fragility of the recent rally, which has been heavily supported by speculative interest rather than fundamental broadening.
As liquidity thins during the summer months, the potential for sharper price swings increases, particularly if geopolitical tensions or macroeconomic data disappoint.