Challenging environment remains for portfolios
June was another tough month for global equities, as fears of escalating trade confrontation and slowing economic growth broadened.
Finding Shelter from Rising Trade Risk
On the edge of a trade war?
The shots of a global trade skirmish were fired on 15 June as US President Donald Trump announced a 25 per cent levy on US$50 billion of imports from China.
Fed Stays Behind The Curve
The Fed raised interest rates as expected and other elements to the policy meeting were only marginally more hawkish. We continue to expect the Fed to need to tighten policy faster and further than it is currently signalling.
Market Volatility to Remain Elevated
We note that its performance has been solid, given the rise in bond yields and positive returns from hedge funds. However, events in Italy have developed such that we consider it prudent to move to a neutral stance for this asset class, and to continue a close watch on developments there.
Clouds Over US Profits
Rising costs and weak productivity growth as the cycle matures pose an increasing threat to US corporate profits. Listed firms should be more resilient, but in the end will face similar pressures.
Europe Slowdown Continues
Flash PMIs for May point to a continued slowdown in the Eurozone economy. However, business sentiment remains at healthy levels, suggesting fluctuations in the pace of growth, but not a threat to the underlying expansion.