BNP Paribas Asset Management

In the wake of the US presidential elections, the prospect of tax cuts, deregulation of the financial sector and infrastructure spending awoke animal spirits. Confidence indicators on the outlook for business among large companies, small business owners and consumers surged.

The Chinese economy was stabilised with another dose of monetary and fiscal easing in 2016, but the imbalances – credit growth that is too strong and opaque, inefficient state-owned enterprises and a bubbly housing market – have hardly been addressed. Thus, our structural worries about China remain. We think that economic growth in China is still structurally on a slowing trend.

In one regard, Japan is somewhat comparable to the US: conditions in the labour market are tight, but wages are not rising.

Looking at leading indicators and the eurozone economic outlook, the scene is set for strong growth, in our view. Taken literally, results from surveys including the purchasing manager indices (PMIs) and the economic sentiment index point to 3% to 4% year-on-year (YoY) growth.

Which assets stand to benefit?

Lessons to be learnt from the performance of Japan’s financial markets

Most drivers of volatility are fundamentally positive, so that fact that 2017 has so far been a year of unusually low volatility in US equities is not necessarily a reason to be uncheerful.

In the immediate future, we do not necessarily see any risks arising from the current, very slow pace that central banks in major developed economies are taking towards normalising monetary policy.

Trumponomics in 2016 gives way to Trumpidation in 2017

Crude oil prices have had their ups and downs (mainly downs) in recent years, falling most recently by close to 4% during the week that began 19 June 2017. While this hit the valuations of oil-linked assets such as some Emerging Markets (EM) currencies, the effect on broader risky assets has been fairly muted.