Equity markets have further to run thanks to strong earnings, resilient economic growth and continued investment in AI.
Asset allocation: remaining pro-risk
The global equity rally may have stuttered in July, but we view this as a pause rather than a finale. Economic growth is broadly resilient, supported by AI-related corporate spending, robust earnings and continued expansion in emerging Asia. Technical indicators are supportive, with improved market breadth. Liquidity conditions have tightened somewhat but are still far from restrictive.
In this environment, equities remain our preferred asset class. With limited action expected from major central banks this year, we are neutral on bonds and underweight cash (see Fig. 1).
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