Inflation trends, central banks and geopolitics to drive markets

Recent weeks have signalled that, in addition to central banks’ policies and inflation trends, domestic politics and their impact on international relations are important determinants of financial markets and economic direction...

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Vincent Mortier

Vincent Mortier

Group CIO

The economic backdrop is getting better but a lot of this improvement is already reflected in asset prices. Hence, we stay only mildly constructive on risk.

Vincent Mortier, Group CIO

Sentiment is positive but build protections

investment

Sentiment is positive but build protections

Amid resilient economic performance in the US and reasonably strong earnings, sentiment on risk assets has been constructive. However, we are noticing some weakening in labour markets and vulnerable segments of the economy are being exposed to high financing costs. While staying mildly positive on risk assets, we reduced our stance on UK equities and see potential for hedges in select corners of equities

Central banks’ divergences may not last too long

The slowing inflation numbers now indicate that data at the beginning of the year may have been aberrations in an otherwise disinflation story. While this indeed pushed yields down, the Fed is being patient and appears in no rush. In its decision making, the Fed will likely also consider slowing economic activity and employment data and wage growth, which is important for services inflation.

Central banks’ divergences may not last too long

stacking coins

Stock picking: go for balance sheet strength, pricing power

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Stock picking: go for balance sheet strength, pricing power

US markets touched record highs recently in hopes that artificial intelligence (AI) will increase earnings at corporate and macro levels. But the big question remains whether AI will boost earnings for the overall economy over the next 5 to 10 years. In Europe, equities partially recovered from declines amid a stabilisation in political newsflow. Looking ahead, we think markets have already priced in a lot of potential productivity gains and resilience in economic activity.

Hot Takes From Us

How do you see the US labour markets evolving this year?
What are your expectations for Fed and ECB policies?
What is your take on US-EU-China relations in the near term?

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