LGT Bank’s Stefan Hofer discusses the current state
of global markets and where he sees them heading.
Equities
still feel like the right place to be relative to bonds for multi-asset
investors, according to JPMorgan Asset Management.
The
pullback in risk assets among overbought conditions and stretched sentiment
doesn’t look like the start of a major downturn, the money manager said.
With
economic and earnings growth remaining solid amid a real macro deterioration,
“stretched valuations just aren’t enough to cause a big market sell-off,” said
Patrik Schowitz, global multi-asset strategist at JPMorgan Asset, in a note.
The firm oversees $1.7 trillion in assets.
Asian equities fell and U.S. stock futures headed
lower Monday, extending the biggest selloff for global stocks in two years as
investors adjusted to a surge in global bond yields. Investors are questioning
whether the Federal Reserve will keep to a gradual pace of monetary tightening,
and whether it may need to boost interest rates by more than previously
expected in coming years.
To be
sure, the biggest "endogenous" risk the firm has been pointing to is
rising bond yields. “The level of yields in absolute terms is not the issue,
rather the velocity of the yield moves is what matters. Investors should
continue to watch this closely,” said Schowitz.
He
said the firm has for some time flagged rising risks of a correction in risk
assets on the back of increasingly more stretched positive sentiment in
markets.
“This
move may yet turn out to be the start of something more significant, but so far
it is pretty limited and it is likely that buyers will step in before we get
near ‘real’ correction levels,” he said.
Source:
Bloomberg