Snapshot

Strategy & economics

Markets in 2020: The stabilisers remain on


Johanna Kyrklund

Johanna Kyrklund

Chief Investment Officer and Global Head of Multi-Asset Investment

Schroders

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With a presidential election in the US in 2020, inevitably political news will continue to dominate the headlines.

However, from a market standpoint, investors will be much more focused on corporate earnings and interest rates. On this front there is some room for optimism.

Normally at this stage of the cycle, and we are at the late stages of economic expansion in the US, we would be worried about recession risk.

But we think the risk of recession has come down. The imbalances that usually cause a recession are absent.

At the same time the easing of trade tensions and the very loose monetary policy are both supportive of corporate activity.

We are overweight equities and quite positive in those markets. However, I don’t think we should party like it is 1999.

Global growth is still anaemic, trade has to recover much more strongly for us to be cyclically exposed and there is a risk that higher wage costs could eat into US profit margins.

So, we still like government bonds as a hedge against global growth disappointment.

All in all, we are positive on equities but with some stabilisers.


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This article is issued by Cazenove Capital which is part of the Schroder Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. All data contained within this document is sourced from Cazenove Capital unless otherwise stated.

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