The world economy is in good shape and we expect stock markets to reflect this. Unemployment is falling at the global level and should continue to do so as companies with strong profits continue creating jobs.
Risk assets better placed than bonds
The global economic upswing has been long but shallow and inflationary pressures remain subdued. This creates a fertile environment for risk assets.
Global tensions on the rise
While our overall economic view remains upbeat, we concede that there are clouds on the horizon. The US Federal Reserve (Fed) is currently raising interest rates, as are other central banks. We are also witnessing an escalating trade war between the US and China, which is straining relations between the world’s two most powerful nations. Elsewhere on the geopolitical stage, we look on with unease as Brexit and a surge of nationalism threaten the established order in Europe.
Past performance should not be seen as an indication of future performance. Stock market and currency movements mean the value of, and income from, investments in the strategy are not guaranteed. They can go down as well as up and you may not get back the amount you invest.
Global GDP Growth Forecasts (% year-on-year)
Source: Bloomberg, as at September 2018