COVID PARALYSIS RECEDES AS POLITICAL RISK RISES
After a buoyant August for risk assets, the rally is likely to flatten out. Rising new infections into the autumn, a leveling recovery pace and diverse political risks (US politics, Brexit, geopolitics) will keep a lid on risk sentiment.
- Market Perspectives
- 31/08/2020
Highlights:
- After a buoyant August for risk assets, the rally is likely to flatten out. Rising new infections into the autumn, a levelling recovery pace and diverse political risks (US politics, Brexit, geopolitics) will keep a lid on risk sentiment.
- Yet recovering data, committed central banks, falling Covid-19 lethality and optimism about vaccines still support a slight pro-risk bias.
- We keep a prudent overexposure to risky assets, centred in high-quality buckets of Credit. Look to increase the pro-cyclical bias in portfolios as the Covid paralysis fades out
Download the full publication below
RELATED INSIGHTS
READ NOW
COVID-19 FACTS & FIGURES
The OECD said in a report that the world’s GDP is projected to decline by 4.5%, less the 6% estimated in June. Asian Development Bank is projecting a 0.7% contraction in the economies of Asia, representing the first drop since the early 1960s.
HEADWINDS FOR A BREXIT TRADE DEAL ARE RISING
Yesterday, a UK government fresh legislation proposal – the Internal Market Bill - led to heated discussions in the House of Commons. According to the UK government, the bill is intended to guarantee the smooth functioning of trade and prevent disruptions between the four nations of the UK, if no deal is reached with the EU by the end of this year’s transition period.
Q2 EARNINGS END ABOVE CONSENSUS, WITH THE US LEADING. EXPECT BETTER GROWTH AHEAD
Compared to our latest - positive - comment on the 20th of July, the yearly earnings growth of the median sector has improved both in the US and Japan, while the picture is less clear in Europe.
Earnings surprises have also increased.
On the contrary, reported sales growth and sales surprises have worsened since then.
