Global economy sees some stability return
The United States and Chinese economies are showing improvement and a recession could even be avoided, according to Etsy Dwek, head of global market strategy, Dynamic Solutions.
According to the latest capital market pulse notes, manufacturing remained weak globally, but services, labour markets and consumers held up.
The equity market continued to rally, but at a slower pace than earlier in the year, which was supported by dovish central banks and improvements in US/China trade discussions.
Treasury yields stabilised to around 2.55 per cent after the temporary yield curve inversion, and Dwek noted that while some yield curve inversions often lead to a recession, not all of them do.
The extension of Brexit until October meant that it would continue to dominate headlines, with uncertainty over the progress on any deal.
Oil prices also continued to rally as the US announced it wouldn’t extend the Iran waivers beyond May. Along with concerns about output from Venezuela and Libya, this would continue to support prices in the near term, but would still depend on if OPEC and Russia increased production.
The chart below shows the returns for the year to date of the North American Equities sector and the Asia Pacific Single Countries sector, which includes China.
Source: FE Analytics
AUTHOR
Chris Dastoor
Recommended for you
Wealth managers globally have said they are highly likely to increase their allocations to active ETFs, according to MSCI.
Perpetual has shared it is keen to expand into active ETFs, especially in the US, as it resets its asset management distribution strategy.
GCQ Funds Management has become the latest Australian fund manager to enter the ETF space with the active GCQ Global Equities Complex ETF.
A new ETF from Pinnacle affiliate Coolabah Capital Investments has hit the market, seeking to generate higher income than other traditional fixed income investments.
