(Vir)alteration of investor optimism

Financial markets staged a strong start to the new year, propelled by the ‘phase one’ US/China trade agreement. And yet, a new spectre has caught the markets. The confirmation of human-to-human transmission of the Coronavirus on Jan. 20 and a first US case a day later caused risk sell-off in the second half of January.

  • Market Perspective

Highlights:

  • Just as the trade truce provided broad-based relief, the Coronavirus is unsettling global markets.
  • The fast-spreading disease is challenging the tender global macro green shoots, but we still see resilience in US and EA domestic demand.
  • Experience from past episodes suggests that markets tend to overshoot, but rebound sharply once the number of new infections starts to slow.
  • Even before the Coronavirus, we had embraced a slightly more cautious stance on early signs of investor complacency. We maintain a (smaller) prorisk tilt in the portfolios, but reduce overweights in Equities and HY Credit. We keep our overweight in IG corporates and underweight in core bonds.

Download the full publication below

(VIR)ALTERATION OF
INVESTOR OPTIMISM
DOWNLOAD
PDF
MORE INSIGHTS

RELATED INSIGHTS

READ NOW
GLOBAL VIEW – ENJOY SUMMER WHILE IT LASTS
As lockdowns have been lifted and global activity rebounded from the Q2 nadir, hopes of a strong recovery have helped risk assets advance further over July.
READ NOW
Generali Investments among preferred asset managers brands in Europe
Listen to the dedicated Podcast by Vincent Chaigneau, Head of Research, on our view on the economic recovery, new behaviours in the aftermath of the pandemic and the unique opportunities for a European fiscal and political integration.
READ NOW
PODCAST:
LIFE AFTER COVID -
THE LDI VIEW
Listen to the dedicated Podcast by Vincent Chaigneau, Head of Research, on our view on the economic recovery, new behaviours in the aftermath of the pandemic and the unique opportunities for a European fiscal and political integration.
MORE INSIGHTS