Equities have fallen hard this year on the prospect of rapid rate increases to rein in inflation, the tragic Ukraine war and a slowdown in China. BlackRock think equities remain more attractive than bonds, even as the historic sell-off in bonds has cut the gap between the two.
Given recent declines, there is much discussion around what is priced into market. With global markets declining for six consecutive weeks, there is an increasing debate over how much bad news is priced in, and whether markets are now oversold.
Coming out of the depths of the pandemic, US equity and fixed income markets are facing new challenges this year amidst a rising interest rate environment and deceleration in growth. With this changing backdrop, Franklin Templeton Investment Solutions’ Ed Perks shares his latest outlook and the investment opportunities he sees across asset classes.
In this article, Stephen Yiu, discusses the performance of the Blue Whale fund as at the end of April 2022 in light of the Ukraine crisis and inflation woes which have weighed heavily on markets this year.
BlackRock sees little chance of a perfect economic scenario of low inflation and growth humming along. Last week’s market rout shows investors are adjusting to this reality. We upgrade investment grade (IG) credit and European government bonds to neutral as we see opportunities there.
On Thursday 12th May 2022, MeDirect will be holding its fourteenth edition of medirectalk focusing on the current Geopolitical Tensions and what the latest developments could indicate for global economies and markets in general. We will also discuss energy price rises, inflation outlook and central banks’ actions with a particular focus on the global high yield bond market.
Last week saw some extreme moves in equity markets as investors digested several central bank announcements, most notably the Federal Reserve (Fed) meeting on Wednesday. In Ukraine, the Russian advance in the east made marginal gains, and with no mention of peace talks anymore, a long, drawn-out campaign into the summer seems probable. The impact of this on commodity and food prices is clear.
U.S. wages are growing at the fastest clip since the 1980s. Is this the start of a “wage-price spiral” – a vicious cycle of companies funding higher pay by raising prices, causing employees to ask for even higher wages? We don’t think so. In reality, we find companies are paying less in labor costs per unit of output than before the pandemic thanks to higher productivity and prices. We believe wages can rise further without adding to inflation – and help normalize the labor market.
Franklin Mutual Series’ Katrina Dudley sees President Emmanuel Macron’s re-election as a positive for the French economy and regional equity markets over the longer term.
Inflation and hawkish central bank talk have spooked investors and led to bond losses not seen since the 1980s in developed markets (DMs). EM debt has also suffered, even ahead of the stress test of higher DM policy rates. The good news: Many EM central banks were early in raising rates to try to rein in inflation.
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