Equity strategy and market outlook – October 2019

In this month’s strategy piece, Alastair believes that the impact of the easing of monetary policy during 2019 is only likely to start to feed into the real economy by early 2020. This still has the potential to drive a substantial improvement in investor sentiment – where current positioning among institutional fund managers still remains bearish for now, according to recent surveys. However, we remain neutral on equities as in our view the risks are balanced. At this stage in the cycle it would not be appropriate to invest aggressively in global equity markets. In some respects, activity may have stabilised at a subdued level, but this would be a generous interpretation of the recent incoming data at this time. The US/China and Brexit political risks remain unresolved, even if for now there have been some significant positive steps and some of the more extreme scenarios appear less probable in the short term. With both the ECB and the US Fed now purchasing assets and on watch for further deterioration in the data, markets are however likely to be supported in the near term while awaiting resolution of the outstanding political risks.

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