- Overweight global equities – We remain positive on global equities, albeit more modestly, and have trimmed some US exposure. The earnings season has been very strong for both tech and financial firms, but also more broadly. Our more modest allocation reflects early signs of stress at the weakest end of the US high yield market and increasingly hawkish communications from the US Federal Reserve
- Focusing on attractive sectors in wake of the momentum unwind – After a frantic rotation within equities, our overlay risk is now focused on the US technology sector (Nasdaq) which has suffered from a period of relative weakness. We also find US and Eurozone banks attractive
- Neutral Eurozone duration, buying two-year US Treasuries – For now, we remain neutral on duration in the Eurozone. Following lower inflation data, and despite recent hawkish comments by Fed policymakers, we have added duration in the short end of the US curve
By Andrew Etherington, Head of Multi-Asset Total Return, AXA IM Core, part of BNP Paribas AM
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