Equity strategy and market outlook – June 2019

In this month’s strategy piece, Alastair acknowledges that we have been surprised by the recent level of excitement in equity markets in relation to some quite predictable shifts in the official outlook for interest rates in the US and Europe, which in large part adjust policymakers’ views towards earlier market expectations. Nevertheless, we remain of the view that global equity markets are unlikely to make material progress without the fundamental support of confidence in profits expectations for 2019. Equities remain at risk from further reductions in profits forecasts in our view, reflecting the declining momentum in global survey data. However, we would not doubt the willingness of central banks to ease monetary policy as the economy slows and believe that lower government bond yields and higher gold prices are a rational response to evidence of a slowing global economy.

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