BlackRock identifies the future of finance as a powerful global factor that is poised to impact investment returns. This encompasses a transformation in the U.S. corporate funding landscape, marked by reduced dependency on bank loans. According to BlackRock, these changes are advantageous for savers.
It felt like Halloween came early for many stocks last week, but this week holds a number of potential drivers, with earnings season continuing a pace and several central-bank decisions.
Corporate earnings in the United States have remained stagnant, mirroring the state of the economy. While broad equities have begun to adapt to the new era of heightened volatility, they still do not entirely account for the macroeconomic challenges that BlackRock foresees.
Heightened geopolitical tensions, higher oil prices and little relief for credit markets kept risk assets under pressure. Markets are closely watching events unfolding in Israel and Palestine, fearful that the war will engulf the broader Middle East.
BlackRock is shifting to a tactically neutral position on long-term Treasuries while maintaining a strategic underweight. Rather than investing in Investment Grade credit, they are opting for high-quality short- and long-term Treasuries and U.S. agency mortgage-backed securities.
Earnings will be a clear focus for markets this week, as third quarter reporting kicks into gear in Europe and the United States. Events in the Middle East will also be closely watched.
Powerful factors are influencing the emerging order, with a current emphasis on geopolitical disunity. BlackRock maintains a cautious stance on developed market equities but is embracing artificial intelligence to capitalize on these potent forces, given the challenging macroeconomic environment for broad asset class investments.
The brutal escalation in geopolitical tensions in the Middle East was a flashpoint this weekend. The largest economic impact so far has been felt in the oil market, with Brent crude oil surging as investors assess the potential broader impact in the region.
As markets adapt to the evolving landscape of increased volatility and rising interest rates, BlackRock believes that new opportunities are beginning to emerge.
Historically, the third quarter has proven to be a weak time of the year for stock markets, and that has proven to be the case again this year. But on a brighter note, many market commentators are highlighting a more positive seasonality effect historically into year-end.
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