Marc-Christian Bollet, Head of Client Relationship Management
Stock markets have been heckled in recent weeks, recording overall declines above 5%.
This correction is explained by the conjunction of several factors, namely the rise in interest rates in the US, that reached 3.25%, the problem of the Italian budget, as well as the pressure of the trade war between the US and China. Moreover, after years of abundant liquidity, the continued monetary tightening programs of the FED and the ECB create increasing volatility. Finally, the political risks increase with the mid-term elections in the United States, the negotiations on Brexit and the Italian question.
However, the rise in US rates reflects the strength of the US economy and quarterly results can support market. Indeed, the latter were not really disappointing, but it is rather the perspectives tinged with uncertainties related to the impact of the trade war that disrupt the value of the companies.
We consider that the end-of-year period, which is historically favorable for risky assets, can support the development of equities, especially since investors take into account a central negative scenario at macroeconomic, political and market levels.