With Biden not coming over well in unscripted addresses, there is a great deal of speculation as to whether he will stand as the Democrat representative in the USA. He remains committed to standing but a new candidate would surely present more of a challenge to Trump. Markets however remain sanguine about the possible outcomes, for now anyway.
European markets have been a little more volatile, mainly due to the uncertainty around the French elections. President Macron has urged political parties to come together in “sincere and loyal dialogue”. The feeling is that any new government will struggle to drive more economic reforms or find common ground on fiscal policy. The UK on the other hand, looks more attractive now to investors.
As we well know, there are a lot of uncertainties across the world but 63% of wealth managers are still bullish on equities for the rest of the year.
Emerging markets have garnered much support over the last year despite a largely disappointing decade for the sector relative to developed markets. Attractive valuations are one of the main attractions.
Technology stocks continue to surge too but there has been significant noise and consternation around the energy usage of artificial intelligence (AI) applications. Interestingly, Microsoft and Occidental have announced this week that they have signed a carbon credit deal to help offset the AI energy surge.
This week’s agenda:
- UK offering stability once again
- Wealth managers are bullish on equities
- Emerging markets offer value.
- Carbon credit investments for AI companies.
- Market returns
- Summary
UK offering stability once again
Craig Wilson, Chief Investment Officer at Asset Risk Consultants (ARC) said about the UK:
“With Labour prioritising higher taxes to finance welfare spending and fiscal consolidation, some analysts suggest that the new government’s proposals could boost demand relative to current policy. However, the near-term impact on the UK equity market is likely to be fairly limited, as only 17% of MSCI UK revenues are actually generated in the UK. In the medium to long-term, reforms could create a more favourable business environment and support sectors with a high domestic exposure”.
An article in Investment Week stated that markets welcome the reduced political risk premium on UK assets after the Labour win. With the outcome expected, Keir Starmer’s victory caused minimal market reaction. The most interesting reaction has been commentators already associating Labour as a beacon of economic stability for the UK.
Continues…
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