Four-Year Bull Run May End Amid Rising Bond Yields and Oil Prices

Global equities are facing a potential correction, according to Rich Dell, global head of equities at Marsh. With assets under advisement totaling approximately $16.2 trillion, Marsh has urged investors to prepare for a possible end to the four-year bull run. The warning comes amid recent sharemarket pullbacks, with the S&P500 experiencing a decline and the ASX hitting a three-month low.

The increased Brent crude prices above $105 a barrel, coupled with rising Australian 10-year bond yields reaching their highest level since 2011, are fueling inflation expectations. This has led to expectations of further Reserve Bank of Australia interest rate hikes.

Global bond yields are under pressure due to government debt and rising corporate debt, exemplified by 'hyperscalers' like Alphabet raising $5 billion for AI development. US 10-year government bond yields briefly topped 5%, while Australian 10-year bond yields climbed to a 15-year high.

Dell argued that the S&P500's 'phenomenal' earnings growth offered protection, but the combination of potentially unsustainable growth, soaring bond yields, and higher oil prices could now trigger a market correction. In contrast, BlackRock's global chief investment strategist, Wei Li, returned to an overweight recommendation for emerging markets, citing benefits from semiconductor demand and AI-related resources.