Market was not expensive pre sell-off and remains attractive

ON UK GROWTH

Threadneedle's Simon Brazier explains why equities should make good progress once sentiment improves.

As many companies continue to announce strong H1 results, recent market weakness reflects increased risk aversion and uncertainty about the economic outlook. Investors have extrapolated sharp falls in leading indicators into a deep double-dip recession, and projected that outlook onto corporate earnings, resulting in sharp downgrades to forecasts and a rotation into defensives at the expense of cyclicals. Leading indicators are pointing to a weak outlook in the developed world. But we believe the market can produce earnings growth far in excess of domestic economic growth, thanks in p...