The theory, which has been baked into market expectations since...

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.