IN THIS QUARTER'S EQUITY OUTLOOK - Download PDF
- Faster-than-expected inflation is a key risk for global equity markets
- European stocks, especially value stocks, may rebound with economic growth
- Italy's political issues pose a potential threat to the integrity of the European Union
- What's fueling U.S. consumer stocks, and can their rally last?
While most world markets advanced in the third quarter, U.S. stocks saw their biggest quarterly gain in nearly five years, boosted by rising wages, low unemployment, continued economic growth, and positive investor sentiment despite an escalating U.S.–China trade conflict. Outside the United States, emerging markets struggled with weaker currencies, rising interest rates, and worries over a slowing Chinese economy.
For equities in the months ahead, we believe rising inflation is a key potential risk, fueled by tightening labor markets and elevated energy prices. The escalating tariff conflict also threatens to disrupt market momentum, although we are seeking opportunities among stocks that we believe are being unfairly punished. We are monitoring developments in a number of markets, with a focus on their vulnerability in a rising-rate environment and political uncertainties that could lead to increased volatility.
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Despite risks of inflation and trade conflicts, opportunities exist for equity investors worldwide.