The jump in global equity prices in the past two months risks a rapid unwind as central banks, including the US Federal Reserve, tack hawkishly to fight persistent inflation despite slowing growth that has increased the chance of recession.

Global equities as measured by the MSCI All Country World Index have climbed 13 per cent from a low in June, in part reflecting a jump in US equity prices. The rally has been underpinned by the idea that slowing growth will force the Fed to cease its interest rate raising cycle and begin cutting the cash rate.