1 October 2018
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".
So what are the key points this month?
- Just a few months ago trade growth was being cited as one of the main causes for a robust streak in the global economy but there are now fears that we are beginning to see a slowdown in global trade growth linked to the potential trade wars.
- As corporate profits are highly correlated with the state of the business cycle, this evolution could slow the earnings growth. While we do not expect the U.S. to soon enter a recession, investors could end up deciding to cut their exposure to U.S. stock market if U.S. earnings begin to stagnate. And as U.S. equities account for 55% of global market capitalization, this could limit the upside for global equity indices.
- To hedge against elevated risks, we maintain a neutral weighting to global equities, while favoring developed market stocks over emerging markets and a more balanced allocation between defensive and cyclical sectors.
“The S&P 500 industry comparison shows that the post-election gains for the pro-Trump sectors (Financials, Industries, Materials and Energy) versus the anti-Trump sectors (Technology and Healthcare) have more than vanished.”