Inflation in the US continues to remain at high levels and this will require further action by central banks to contain it.
Equity markets, both in the US and Europe, will continue to be vulnerable to other bad news and the recent deterioration in macro data could justify further future weakness, says Giuliano Gasparet, Head of Equity at Generali Insurance Asset Management.
In addition, more and more companies are warning about their profits, lowering expectations for the remainder of 2022 and for next year; just this week we had high impact profit warnings from major companies such as Dow Chemical, Eastman Chemical, Kion and Fedex. The only sector showing a positive revision of earnings is the banking sector, since the recent interest rate movement is extremely positive for the earnings of European banks, a segment that currently has rather low valuations.