Equity strategy and market outlook – July 2019

In this month’s strategy piece, Alastair believes that global markets have been promised significant monetary easing and it is now time for central banks to deliver. Both the ECB and the US Fed are expected to demonstrate a commitment to easier monetary policy in coming days and anything less will be likely to be received poorly by markets. There has been an obvious U-turn in monetary policymaking from normalising to easing on both sides of the Atlantic, which has been beneficial for gold. However, equity investors are demonstrating a touching faith in the ability of central banks to support the economy and corporate profits, which may yet be tested in H219 as 2019 profits forecasts have re-established their trend of downgrades. Given the length of the global expansion, very low unemployment and rising debt levels in a number of sectors within the global economy, profits in our view should continue to be taken in equities as valuations rise and expected returns fall. A degree of caution remains warranted in our view.

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