The mood in financial markets changed quite dramatically in the second week of October. More specifically, Wall Street, which had seemed to defy gravity all year, finally cracked.
The strength of the dollar coupled with president Donald Trump’s sabre-rattling soap opera on trade war has put our panel of asset allocators more on the defensive. The global growth numbers remain too strong to persuade any of them to call an end to the long bull market in equities. But cash levels in their portfolios are rising, and the average score for global bonds (mostly US Treasury bonds) has edged higher.
Despite apparently benign market conditions, our panellists have become more cautious in their outlook.
Our panel of experts concur that a downturn on Wall Street is likely, but disagree over the prospects for UK assets.
Our expert panellists are not convinced that Donald Trump's economic policies will be uniformly good news for business and growth prospects.
Unattractive bond markets, low growth and political risk are concerning our panellists, as they position for long-term sterling weakness.
Doomsday Brexit predictions may have been overdone but its early days and caution prevails despite some cheer regarding US and Japanese equities.