Equity Outlook  |  Q2 2018

Assessing market themes after a challenging quarter

Equity Team

Assessing market themes after a challenging quarter

  • Tariffs and geopolitical tensions have implications for equity markets, but not all the impacts are negative.
  • Despite progress with Brexit negotiations, we are cautious about U.K. equities and believe the U.K. economy remains challenged.
  • For a number of reasons, the U.S. housing market continues to be a bright spot for consumers and equity investors.

After an extended period of record advances and low volatility, global stock markets encountered their share of challenges in early 2018. Stocks began the quarter against a backdrop of optimism, but soon lost ground, beginning with a sharp downturn that pushed the U.S. market into correction territory in early February. This was followed by a series of market ups and downs that, combined with fears of a trade war, resulted in a turbulent quarter for equity investors worldwide. Such disruptions in market momentum can create compelling investment opportunities for portfolios. Looking ahead, we remain focused on business fundamentals and underappreciated earnings growth potential. We are optimistic about GDP growth trends across global markets and believe the likelihood of a recession remains low for most economies.