IN THIS QUARTER'S EQUITY OUTLOOK:
- The key risks weighing on equity markets may subside in the coming months.
- In the current equity market environment, one of our concerns is the potential for a policy error by central banks.
- U.S.–China trade and a slowing Chinese economy are challenges to navigate, but they offer the potential for positive outcomes.
Equity investors worldwide greeted the new year with an array of heightened concerns. A difficult fourth quarter brought volatility and annual losses for many major indexes. Among the issues that contributed to the downturn were geopolitical instability, uncertainty about monetary policy, a slowing Chinese economy, and the U.S.–China trade dispute.
Looking ahead, we believe the key risks weighing on equity markets may subside. A resolution of the tariff conflict, even if limited in scope, is quite possible. In China, more aggressive stimulus measures could improve the outlook for both the Chinese economy and global markets. And in the wake of fourth-quarter selloffs, we have the benefit of more attractive valuations for companies whose fundamental prospects are strong.