(CercleFinance.com) – Pictet sent a general message of caution on the equity market, when it presented its market convictions on Monday May 9.
François Rollin, Senior Investment Adviser – Investment Strategist at Pictet, notably highlighted the “sharp economic slowdown” which is leading to a downward revision of the profit outlook.
US GDP came out negative for the 1st quarter and the confidence indicators (PMI) show the deterioration of consumer confidence and strong pessimism among investors.
Moreover, if inflation shows signs of stabilization, it remains at a ‘worrying’ level which worries central banks. Consequently, the markets are now anticipating a tightening of monetary policies of around 6% in 2 years, indicates the specialist.
The Fed also plans to reduce its balance sheet by $95 billion per month, a tightening which will be carried out even if the economy is to suffer, ‘because the risk of inflation is real and serious’, continues François Rollin.
The theme of inflation could indeed be a central subject during the mid-term elections in the United States in which the Democrats are largely losers in the polls.
In Europe, Pictet estimates that the ECB should raise its rates twice this year, in view of the weakness of the Euro which pushes to import inflation.
In addition, the geopolitical context never ceases to worry: in addition to the confinements in China, the Secretary General of NATO raised the possibility of a conflict in Ukraine which would stretch over several years…
In this context – in which Pictet foresees a ‘possible storm’ in the long term – certain themes nevertheless seem promising. The cyber security market is experiencing average annual growth of 8.3% and could therefore attract investment, just like the health or solar energy markets.
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