Global stock market turbulence
After a very strong start of the year, the early days of February 2018 have shown levels of volatility not seen in years, with equity markets giving up most or all of their year-to-date gains in just a matter of days.
When building portfolios together with our clients, the downward risks of both short-term equity returns and medium term cyclicality as described in our December 2017 Quarterly Outlook have been taken into account.
Obviously, the recent developments will have an impact on our momentum outlook going forward. It is too early to tell if there will be an impact on our business cycle outlook. The fears of increasing inflationary pressures, which play a role in the recent market turbulence, are supported by our medium term inflation expectations having increased during the fourth quarter of 2017.
After the strong returns of January, we see a clear weakening of our momentum outlook per the end of January 2018. The definite impact of recent events at the beginning of February on our momentum and business cycle outlook will be fully incorporated in our outlook per the end of February 2018.
In the meantime, your Ortec Finance team is always available to discuss the impact of the current market developments on your investment decisions.