Indices 29/07, page-43

The theory, which has been baked into market expectations since the end of 2022, is that rate cuts will act as a sort of panacea for markets, reducing the pressure on corporate and consumer balance sheets and helping deliver the big boost to earnings analysts are forecasting over the next year and a bit.

But history doesn’t really support that. Since the 1970s, the S&P 500 has typically fallen by 23 per cent on average in the first 200 days or so following the first rate cut. In 1990-91, in 2000-01, in 2007-08, a US recession didn’t start until after the first cut.