Strong earnings prompt US equities upgrade

Amid background noise such as ongoing trade skirmishes involving the US, the evolving Chinese economy and geopolitical tensions, we have spent time analysing recent market movements and the implications for risk assets. Our belief that markets will continue to provide low but positive returns has been reinforced, and our views on asset allocation positioning ultimately remain unchanged. However, we have recently upgraded US equities from dislike to neutral.

Since the end of 2016, the US equity market has been the worst - performing major market in common currency terms, and this has been consistent with our outlook of steady global growth and reflation, where we would expect emerging markets, Europe and Japan to outperform.