21st December 2011
The ongoing eurozone crisis is set to continue to weigh heavily on markets in the new year, it has been claimed.
According to Keith Wade, chief economist at Schroders, Europe is entering into a second serious recession and this is likely to be reflected in market performance for 2012, with investors set to have a tough time to deliver positive yields.
He noted: "Uncertainty will reduce demand for risk assets up until the time when valuations reflect the worst case scenario, or until the need for returns start overriding fear."
Mr Wade added however that a fall in inflation will likely provide some stimulus for growth in the coming year, while the strength of the private sector will also help to rally markets.
The news follows predictions by head of UK equities at Schroders Richard Buxton, who recently claimed the biggest drivers of equity markets over the coming 12 months is likely to be a positive uplift in risk assets.
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