Equity and fixed income markets have stalled in recent weeks as investors priced the benefits for risky assets from the trillion-dollar US fiscal stimulus, while the prospects of a further massive infrastructure package remain unclear. It is not just the ultimate size of this spending plan that is capturing investor attention, but also how it will be financed.
Another big topic is the outlook for inflation. Are further surprises in store? And how would those fit with concerns that US growth is peaking? Stagflation anyone?
Watch our asset allocation video with chief market strategist Daniel Morris to find out why we still favour risk and equities.
Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice.
The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.
Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).
Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.