Over the last three months equities have broadly maintained their positive momentum from the second quarter. Nonetheless, it certainly hasn’t been a clean sweep this time around. We have seen a divergence of returns as developed market stocks, with the exception of the UK market, topped the performance tables; whilst emerging markets, both debt and equity, have come under continued pressure.
Similar themes have dominated the direction of travel this quarter. Global economic growth continues at a robust rate; corporate balance sheets remain fairly healthy and earnings growth remains supportive of valuations.
However, political rhetoric has remained elevated over protectionist trade policies, whilst currency volatility has rapidly increased and unsettled markets throughout. Moreover, in Europe, Italian politics have failed to appease tensions and provide the much needed unity across the European bloc ahead of Brexit next year.
Over the quarter we have continued with our stance of having a bias towards risk-on assets over defensive alternatives. Together with our selective regional preferences this strategy has largely been rewarded.
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