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September Investment Strategy : Can politics and central banks derail the ongoing recovery?

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September Investment Strategy : Can politics and central banks derail the ongoing recovery?

A surprisingly benign summer despite Brexit and ongoing modest recovery should not leave room for complacency.

Central banks remain at the centre of market focus but expectations may be too high: while the Fed signals modest tightening, and the BoJ a stabilisation of accommodation, we expect only a modest ECB move in December. Markets may soon question central banks “new normal”.

Political risks will slowly take the front stage, primarily with the US Presidential Elections coming into focus. While some risk-off reaction is possible, markets may see a Trump election as lifting short-term economic activity and boosting corporate profitability which could support the dollar. Italy’s referendum will follow suit but too late for the bank topic to come back in 2016.

Source : AXA Real Estate

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