I markets travel shipped to peak, but in half period the trend remains favorable and therefore to be exploited. In theequity, l’Europe seems to offer better deals than the United States. On the bonds, l’rate uncertainty suggests a lot caution. Between currencies, alternatives to the dollar, a depreciation risk. An eventuality that could benefit the subjects prime, quoted precisely in the American currency and therefore exchangeable at higher prices. The analysis emerges from the Monthly Outlook of Allianz Global Investors.
A four-sided peak
I financial markets, as anticipated, they are accelerating and a four-sided peak. The first expected peak is that of growth dynamics: in the context of the post-pandemic boom, since last spring various economic data have highlighted record levels. Growth is still expected to be solid and higher than the trend of recent years, but a gradual slowdown is likely. The second is that of stimuli: The stronger the economic recovery, the higher the likelihood that fiscal and monetary stimuli will be called into question. Canada and the UK have slashed their asset purchase programs, while Brazil and Turkey have already raised rates (and the Fed has also hinted that it will consider policy changes). The third, that ofinflation: continuously increasing in recent months, with the price hikes supported by the reopening, it is expected to experience a progressive slowdown. The fourth, that ofoptimism: minimum rates and ample liquidity have nourished investors’ risk appetite. The drop in prices in some sectors shows that here too we are going towards a slowdown after reaching the maximum point.
The strategies to be adopted
In this complex context, however, the forecasts remain favorable in the medium term. In theequity, the prospects should remain positive since, even in the event of a slowdown, growth in the second half will probably remain above the trend level. On the main world stock exchanges, we travel at a mid-cycle rate. Geographically, Europe could stand out positively in the coming weeks: the peak of economic growth is expected later than in the US. On the bond front, the watchword is caution. There has been some instability recently, particularly on the American market. In Europe, an apparent calm prevails, while on a global level the divergences in monetary policy appear increasingly clear. On the currencies, the increased risk appetite and the acceleration of global growth point to a new slight depreciation of the US dollar. In this context, a more selective positioning in relation to a decline in the US dollar appears justified, for example against the Australian dollar, the Canadian dollar or the Norwegian krone. The Mexican peso and the Russian ruble are preferred among the emerging markets. Finally, the raw material. Here there is an interesting growth trend of oil, while gold could suffer the negative effects due to the rise in real yields. Generally speaking, the depreciation of the USD typically supports commodities, which are priced in dollars and therefore trade at higher prices.