1 March 2019
What's new in the financial markets?
Chief Investment Officer ING Belgium
Thierry Masset, Chief Investment Officer reviews the economic and financial news. Every month, he analyses events that have impacted the financial markets. The context of any potential stock market fluctuations is equally scrutinized. You can find this market analysis and ING's investment strategy by consulting our "Monthly Market Review".
A V-shaped recovery
- When the Fed Chairman Jerome Powell indicates greater willingness to be patient before tightening monetary policy again and, even more important for markets, signals that he is flexible on the path for reducing its balance sheet, there is a reason to follow the old maxim of “don’t fight the Fed.”
- But what investors seem not to be discounting is that the more volatility declines and talk of complacency heats up, the more inclined the Fed might be to raise interest rates, maybe not this quarter or the next, but possibly in the second half of the year.
- Furthermore, global political uncertainty at record level, disappointing manufacturing activity, weaker earnings growth, and lower consumers and fund managers confidence are sufficient reasons for not chasing the rally in risk assets, particularly in areas vulnerable to growth downgrades, geopolitical risks or sudden shift in supply/demand dynamics.
“Money managers surveyed by Bank of America Merrill Lynch aren’t convinced by the new-year equity rally and prefer cash to stocks. Their global equity allocations in February fell to the lowest level since September 2016 and their cash allocation is the highest since the 2009 financial crisis, even as the MSCI All Country World index is up almost 10% (in euro) in 2019. That indicates a deep lack of conviction in the sustainability of the rebound among traders!”