We are cautiously optimistic about global equities, whose value is no longer expensive. The tightening of the Federal Reserve's trajectory is one of the main reasons why risky assets should regain their footing.
We continue to favor a combination of cyclicals and growth, but we would use the rebound of industries to reduce some cyclical exposures.
AAUC Credit and Equity Strategy
The reversal of the US Treasury yield curve, trade tensions and December rate hikes by the US Federal Reserve (Fed) frightened the stock markets in the fourth quarter, resulting in a sharp reversal of the situation of outperformers such as US equities and growing sectors (IT). , energy). The S & P 500 lost 14% in the fourth quarter, while the MSCI AC World closed the year 2018 with a negative return of -9%.
IT delays the rebound
In early February, a likely tightening of the Fed and cautious optimism on US-China trade relations have given hope for a further extension of the cycle. As a result, equities rebounded, with US equities and energy and communication services outperforming. Our views on underperformance – consumer staples, utilities and real estate – were also taken into account. Yet, faced with the challenges of growth, the IT sector has fallen behind.
Continue to favor emerging markets over equities in the euro area
We are cautiously optimistic about global equities, whose value does not seem expensive anymore. However, investor sentiment remains fragile in the face of macro and political uncertainties. The slowdown in the Fed's tightening is one of the reasons to be cautiously optimistic about the possibility for risky assets to recover over the next few months. Other catalysts, such as a commercial truce between the United States and China, a new season of strong US earnings growth and stabilization of purchasing managers' indices are also necessary for equities to recover more. Although emerging market equities outperformed in the fourth quarter, we maintain our preference for emerging market equities over the euro area as new stimulus measures in China are expected to boost economic activity in 2019.
Maintain the cyclical inclination of the sector in favor of growth
The cyclical equity sectors appear to have overreacted to the decline in global PMIs so far. We therefore maintain our focus on a combination of cyclical sectors (energy, financial services), growth (information technology, communication services) and price-setting power (health care) on industries, industries and industries. utilities, consumer staples and real estate.
This part of the document: (i) aims to provide comments on the macroeconomic market; (ii) contains no representation or advice regarding a specific negotiable security or financial product; and (iii) does not take into account your personal circumstances and should not be treated as any form of regulated financial advice, legal, tax or other services.