Stockholm (Ekonamik) – While keeping an eye on the Fed and European GDP and inflation data, Ekonamik peaked into asset manager’s views of equity markets this week.
Economic developments were rich in green shoots this week. In the USA, the Fed’s continued dovish tone together with the lowest unemployment figures since December 1969 led the Nasdaq to close the first week of May at a new historical high. Meanwhile, in the Eurozone, 2019 Q1 GDP growth and April inflation outperformed expectations. India, the world’s largest democracy, is holding parliamentary elections between 11 April and 19 May 2019. Recent developments in Uttar Pradesh, Maharashta and West Bengal have created some uncertainty for the election result. In geopolitics, hopes emerged that the USA-China trade war might be nearing a resolution at some point in the next two weeks.
Inspired by the market’s enthusiasm with the US economy, our “Asset Managers’ Insights” column focused on equity markets this week. Our review suggests that investors seem concerned with mispricing in equity markets following the 2019Q1 adjustment to more dovish global monetary policy stance. Asides from these concerns, the main focus of European equities seems to be the uncertainty of local political developments.
Finally, in a more analytical article, we also highlighted interesting research notes from Winton Capital, PIMCO and Schroders discussing the bond-equity correlation. We consider the stability and structure of the relationship as well as some of the academic research on what drives the direction of the relationship between these two asset classes.
