Analyse de l'allocation d'actifs, Investment strategy, Market commentary

Asset allocation – June 2018

June 8, 2018 - Guillermo Felices, Head of Research and Strategy & Colin Harte, Head of Research - MAQS

Three stocks hit markets: (i) an escalation of political risk, (ii) weakening growth (notably in Europe); and (iii) a stronger USD, which led to stress in emerging markets In Italy, market worries about fiscal excesses and the prospect of a clash between the new government and European authorities escalated. As a result, ‘peripheral’ eurozone debt sold off. Italian markets are likely to remain volatile in coming months as investors digest further news on political developments and economic data There are signs of a growth slowdown, notably in the eurozone, according to recent data. However, we find it difficult to call a turn in the economic cycle yet. While the data have weakened, activity is still expanding both in the developed world and emerging markets Emerging market stress was largely a consequence of higher US yields and USD strength. In our view, local debt offers value and currently lower US yields are reassuring, but we need to see the USD and global risk sentiment stabilise for EM debt to rally materially

Global equity market performance was mixed in May with the US up by about 2.3%, driven by the information technology sector. Financials and insurance, on the other hand, finished below where they had started the month as the rise in US yields slowed down around mid-May after reaching a seven-year high.
European equities underperformed, especially in the eurozone, with the EuroSTOXX 50 down by almost 4%. This followed a strong performance from April to mid-May. European equities were hit by an escalation of political uncertainty in Italy which was compounded by ongoing concerns about weakening growth in the euro area.
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October 10, 2018

So far so good, but markets underestimate risks

September 10, 2018

SUMMARY: US equities continued to outperform other markets such as EMU and EM equities. This partly reflects the divergence between the US economy -which is supported by fiscal expansion and a patient Federal Reserve- and relatively weaker growth in the eurozone and EM. But there is more to this divergence than faster US economic growth. The US equity rally has been led by the IT sector. This has accounted for 20%-50% of US equity returns since 2016. The rally is now looking stretched on various metrics. The other salient development in August was renewed stress in emerging markets (EM). A combination of economic stress in Turkey, weaker growth in China, Sino-US trade tensions and a stronger US dollar hurt EM assets. We believe there is value in EM assets, but the obvious circuit-breakers are still absent: a weaker USD, aggressive China stimulus and fresh Sino-US trade talks. EM assets prospects have soured and protectionism and tighter liquidity continue to cloud their longer-term prospects.

July 11, 2018

Foreseeing calmer markets over the next few months, we have identified several reversal themes

Asset allocation flash – 25 June 2018

SUMMARY: Despite trade tensions, concerns about global growth and more volatile markets than in 2017, our base case scenario remains one of robust global growth and contained inflation. This underpins our bullish view on equities, with a preference for eurozone equities where we see positive earnings growth prospects and room for margin expansion

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