Burkhard Varnholt: "Every Bull Market Needs to Take a Rest"
Markets ran into some turbulence in August. Is this soft patch an opportunity to buy or to sell?
Recent weeks have seen growth optimism alternate with spikes in risk aversion. Unsurprisingly, financial markets have been subject to greater ups and downs than in past months as they were unnerved by the tensions between North Korea and the USA, while welcoming confirmation of continued strength of the global economy and still moderate inflation.
In a reflection of that mixed sentiment, global bond yields continued to decline in August, while equity prices essentially moved sideways. Gold gained ground amid the geopolitical tension and lower bond yields, while the hurricane season impacted energy prices.
In light of the opportunities and risks, we confirm our neutral allocation to global equities and our positive view of the Eurozone, Swiss and Australian equity markets. Yet we reduce our view on UK equities to negative. Our other allocations – neutral on fixed income, positive on commodities – are unchanged.
Watch the Global CIO Video featuring Burkhard Varnholt, Deputy Global Chief Investment Officer: