| Monthly Investment Review
Strong momentum in many developed and emerging equity markets in Quarter 1 has carried over into April, with the US S&P500 Index marking a fresh all-time high.
Dovish central banks - led by the Federal Reserve, China’s stimuli, hopes of resolution in the US-China trade dispute, and a strong US earnings season are all reasons why monies continue to be deployed into risk assets. Some sentiment surveys, however, suggest that investors are now overly optimistic following extreme pessimism at the end of last year.
Most equity markets are turning a blind eye to still dismal economic conditions in manufacturing industries and are focusing instead on the favourable earnings season. Global manufacturing PMI has fallen from a cycle high of 54.4 in early 2018 to 50.6 now, only slightly above the ‘boom and bust’ line of 50 that distinguishes between growth and contraction. Conditions in the eurozone continue to be particularly grim. The contrary to this is that global conditions in service industries remain solid.
Given the current market environment, Zurich believes it makes sense to take a neutral stance on equities on a tactical basis.
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16 May 2019