Volatility is back, the U.S. Federal Reserve (the Fed) is picking up the pace of hiking and trade-war threats are increasing. But global growth is still strong and the U.S. economy is getting a jolt of fiscal stimulus. The tailwinds still outweigh the headwinds for now; however, this balance could shift as the year progresses.
Key global market outlook highlights
- Fiscal stimulus adding to already strong global growth momentum
- Central banks becoming more hawkish, with the U.S. Federal Reserve potentially hiking four times this year
- Global equities could still push higher before facing headwinds later in the year
Global Market Outlook resources
2018 Global Market Outlook –
Cycle tailwinds from synchronized global growth, strong earnings and fiscal easing currently outweigh the growing headwinds from monetary tightening and inflation pressures, but we wouldn’t throw caution to the wind as 2018 progresses.
Where are global markets heading?
Our central view is that equity markets can push higher before facing headwinds later in 2018 as markets factor in rising risks of a 2019 recession.
Opposing market forces vie for dominance in early 2018
Our global team of investment strategists believes investors will face increasingly complicated market conditions in the months ahead, as U.S. tax cuts, synchronized global growth and strong corporate profits battle monetary tightening and inflation pressures for control of global economies. The tailwinds are prevailing for now, but the strategists believe headwinds could overcome markets later in the year as interest rates rise, inflation picks up and profit margins come under pressure from rising labor costs. Protectionist trade policy has also emerged as a risk, but the team views a full-blown trade war as unlikely.
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SENIOR INVESTMENT STRATEGIST, EMEA
INVESTMENT STRATEGY ANALYST
Stephen Wood, Ph.D.
CHIEF MARKET STRATEGIST