Growth, monetary policies and geopolitics remain the key drivers of market returns and investment decisions, with their relative influence changing over time. The YTD revival of risk assets has translated into rosier expectations on growth. We remain cautious; we confirm the late cycle environment with extra dovish central banks and growth stabilisation ahead, as our economists are predicting. However, we also look towards the reporting season to confirm the solidity of corporates’ fundamentals and we expect a rerating in the face of European elections.
− We consider the US and European reporting seasons and a SinoAmerican trade agreement as potential triggers for the financial markets to re-rate in Q2.
− While it is tricky to find good top-down stories because of messy or challenging issues at regional/country level that require us to be selective, we think emerging markets and credit continue to screen well on a cross asset perspective.
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