As an active manager, we believe that insight and understanding are the keys to investment success.Some of the biggest factors moving markets today are the shifting monetary policies of central banks and the changing political landscape. Our investment experts help you understand what it all means for our investment outlook and what it could mean for your portfolio.
In the face of slowing global economic growth, continued trade tensions and the prospect of a “hard Brexit”, the FOMC seems set to announce a reduction in interest rates at its next meeting. We expect a 50-basis-point cut that will start a new rate-cut cycle, and we think the markets should react favourably.
“Under-owned, cheap and unloved” – those words sum up how many investors view the UK today. Some see a fresh start in the arrival of a new prime minister eager to change the narrative. But it’s difficult at this stage to look beyond Brexit to make a convincing short-term investment case for UK assets, despite a number of enduring positive fundamentals.
As a companion piece to Neil Dwane’s global mid-year outlook, Mona Mahajan turns a spotlight on the US, where trade tensions and politics are weighing on markets. Given the increased uncertainty about the second half of the year, investors should stay active, defensive and diversified.
The ECB’s next meeting on 25 July is of major importance, and markets should welcome confirmation of its new forward guidance. We expect the central bank to reaffirm that it has the will to support growth and manage inflation, and the tools needed to take action.
Continued uncertainty means the ECB continues to put the normalisation of its monetary policy on hold. Any rate hikes remain a long way off, but the 6 June meeting will see the Bank present revised economic forecasts in light of the current low inflation environment.
While the pro-European vote held up in many countries, the result will likely be a more fragmented European Parliament that may slow decision-making. Most challenging for European leaders could be the signs of increasingly polarised electorates.