‘Taper tantrum’ by stock markets points to gaps in the easy recovery story | Nils Pratley

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Financial markets these days react to any whiff of tighter monetary policy in the US, so a little drama on Thursday was par for the course after the US Federal Reserve’s minutes suggested the winding-down of the huge pandemic stimulus programme could start soon. The Fed will still be buying assets in the autumn, but maybe not at the rate of $120bn (£89bn) a month. Commodities fell and shares globally took a hit. The FTSE 100 index dropped 1.5%.Context is needed, of course. The Footsie had risen by 25% in a straight line, more or less, since the arrival of vaccines last November. If one goes back further to the start of the pandemic, the S&P 500, the main US index, has roughly doubled from its low point. So the odd percentage decline hardly shows up on a medium-term view.But there are at least three related reasons – in addition to fretting over the Fed – to suggest the going gets tougher for stock markets from here. First, there’s a sense of “peak optimism”. T
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