Pictet Asset Management
Prospects for Swiss and financial stocks look bright even if equity markets are likely to remain volatile.
Asset allocation: caution following market whiplash
A whipsaw month in the global equity markets – down 9 per cent during the month at one point followed by a rebound that left stocks slightly higher than where they started – leaves us caught between caution and optimism. With little having changed fundamentally on the month, we stick to our neutral position on equities.
Our caution reflects the market’s recent volatility and signs of economic slowdown – not to mention uncertainty about the coming US election and lagged effects of monetary tightening. On the other hand, the fact that gains are spreading across the market, the imminent start of a US rate cutting cycle and our expectation that the global economy will see a soft landing are all positive.
At the same time, we remain neutral on bonds and cash. Bonds have rallied strongly over the summer in anticipation of significant central bank easing, and there doesn’t appear to be significant value in the asset class given where yields now are.
Both monetary and fiscal policy developments are high on the agenda. Central banks are poised to ease significantly while the outcome of the finely poised US election will in part determine the outlook for the country’s massive deficit.
Click here to read the full September 2024 Barometer.
