market outlook

Pictet Asset Management advises its clients to remain underweight in equities and maintained an overweight view on US Treasury bonds. In its latest market outlook, the Swiss-based firm said it reduced the risk in its portfolio by downgrading Chinese stocks to neutral.

Quintet Private Bank sees “significant long-term opportunities” in a world that has experienced multiple ‘black-swan’ type events – Covid-19, the invasion of Ukraine and a miniature version in China’s decision to lock down Shanghai in late March. Presenting the firm’s outlook, Ilario Attasi, group head of investment advisors, and Nicolas Sopel, senior macro strategist, said investors can still find opportunities in tech stocks, among others.

Since 1926, the S&P 500 index has fallen by more than 20 percent fifteen times. On average, the index fell 34 percent in seventeen months during such a period. As many as eleven of the fifteen times the market paused somewhere between 15 and 20 percent price decline, just as it is doing now.

Then some of the earlier losses were made up for. On that basis alone, there is a good chance that the fall will continue.  

Amid lingering fears of stagflation and a possible recession, investors are hard pressed to find opportunities in today’s markets, if any. Market experts at JP Morgan Asset Management believe that those willing to look at fundamental factors underpinning equities, also in Europe, can find ways to enrich their portfolios with some specific quality growth stocks if they know where to look.

The extent of investor confusion about the outlook for financial markets is clear from the latest Big Money poll by US investment platform Barron’s: a quarter of participants are bullish, a quarter are bearish and half do not know. 

The Nasdaq is in a clear downtrend. It is still being held up by the ‘generals’, the big tech heavyweights such as Alphabet, Microsoft and the like, but it is important to watch out.

When it comes to the prospect of a recession, and a possible prolonged period of stagflation, the jury is still out, even in Europe. Although in agreement on a deteriorating economic outlook, major asset managers such as BLI, Pictet and JP Morgan hold diverging views on what’s next. For investors, corporate earnings are now seen as the next waypoint.

The first quarter of 2022 was one of the toughest in decades for investors with a neutrally balanced portfolio, writes Bloomberg on the basis of its own data. The S&P 500 fell by 4.9 percent, US treasuries lost 5.6 percent and investment grade even fell by 7.8 percent. 

Long duration trades are fading into the background because of tighter monetary policy. Markets have adjusted swiftly and find themselves in the middle of the cycle. The volatility that accompanies this is not necessarily disastrous, said Steven Vandepitte (pictured), asset allocation strategist at ING Private Banking. 

Vandepitte believes that the US faces three to four interest rate hikes at most. 

Quintet private bank is counting on an accelerated global recovery in the spring and is advising its clients to increase risk in the short term. The bank is overweight equities, especially those from the US and emerging markets.

With the recovery of the global economy that has begun and the support measures of central banks and governments, the climate is favourable for investments in risk assets, according to Quintet’s Bill Street.