InvestNow News – 2nd October – Russell Investments – 2020 Global Market Outlook – Q4 update: The Old New Cycle
Article written by Russell Investments – 28th September 2020
Introduction
2020 continues to surprise. A pandemic, the shutdown of the global economy, the deepest recession since the 1930s, a global equity market collapse and now, record highs for the U.S. equity market. The upcoming U.S. election is shaping up as a tight contest, with the potential for more surprises and market volatility.
We’re in the early recovery phase of the cycle following the COVID-19 recession. This implies an extended period of low-inflation, low-interest-rate growth—an environment that usually favours equities over bonds. But after such a rapid rebound, an equity market pullback would not be surprising. Technology stock valuations are elevated, and the U.S. federal elections create uncertainty around tax changes, government regulations and the re-escalation of China/U.S. trade tensions.
Beyond this, the market looks set for a rotation away from technology/growth leadership toward cyclical/value stocks. This also implies a rotation toward non-U.S. stocks with Europe and emerging markets the main beneficiaries.
Our cycle, value and sentiment (CVS) investment decision-making process scores global equities as slightly expensive, sentiment as neutral and the cycle as supportive. This leaves us neutral on the near-term outlook, but moderately positive for the medium-term with slightly expensive valuations offset by the positive cycle outlook.
IMPORTANT INFORMATION
The views in this Global Market Outlook report are subject to change at any time based upon market or other conditions and are current as of 28 September 2020. While all material is deemed to be reliable, accuracy and completeness cannot be guaranteed. The information contained in this publication was prepared by Russell Investment Group Limited on the basis of information available at the time of preparation. This publication provides general information only and should not be relied upon in making an investment decision. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant Russell Investments’ fund having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant Product Disclosure Statement or Information Memorandum prior to making an investment decision about a Russell Investments’ fund. Accordingly, Russell Investment Group Limited and their directors will not be liable (to the maximum extent permitted by law) for any loss or damage arising as a result of reliance being placed on any of the information contained in this publication. None of Russell Investment Group Limited, any member of the Russell Investments group of companies, their directors or any other person guarantees the repayment of your capital or the return of income. All investments are subject to risks. Significant risks are outlined in the Product Disclosure Statements or the Information Memorandum for the applicable Russell Investments’ fund. Past performance is not a reliable indicator of future performance. The Product Disclosure Statements or the Information Memorandum for the Russell Investments’ funds (as applicable) are available by contacting Russell Investment Group Limited on 09 357 6633 or 0800 357 6633. Copyright © 2020 Russell Investments. All rights reserved. This information contained on this website is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments.
NZ1-00165-2020-09-29
InvestNow News – 2nd October – Russell Investments – 2020 Global Market Outlook – Q4 update: The Old New Cycle
Article written by Russell Investments – 28th September 2020
Introduction
2020 continues to surprise. A pandemic, the shutdown of the global economy, the deepest recession since the 1930s, a global equity market collapse and now, record highs for the U.S. equity market. The upcoming U.S. election is shaping up as a tight contest, with the potential for more surprises and market volatility.
We’re in the early recovery phase of the cycle following the COVID-19 recession. This implies an extended period of low-inflation, low-interest-rate growth—an environment that usually favours equities over bonds. But after such a rapid rebound, an equity market pullback would not be surprising. Technology stock valuations are elevated, and the U.S. federal elections create uncertainty around tax changes, government regulations and the re-escalation of China/U.S. trade tensions.
Beyond this, the market looks set for a rotation away from technology/growth leadership toward cyclical/value stocks. This also implies a rotation toward non-U.S. stocks with Europe and emerging markets the main beneficiaries.
Our cycle, value and sentiment (CVS) investment decision-making process scores global equities as slightly expensive, sentiment as neutral and the cycle as supportive. This leaves us neutral on the near-term outlook, but moderately positive for the medium-term with slightly expensive valuations offset by the positive cycle outlook.
IMPORTANT INFORMATION
The views in this Global Market Outlook report are subject to change at any time based upon market or other conditions and are current as of 28 September 2020. While all material is deemed to be reliable, accuracy and completeness cannot be guaranteed. The information contained in this publication was prepared by Russell Investment Group Limited on the basis of information available at the time of preparation. This publication provides general information only and should not be relied upon in making an investment decision. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant Russell Investments’ fund having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant Product Disclosure Statement or Information Memorandum prior to making an investment decision about a Russell Investments’ fund. Accordingly, Russell Investment Group Limited and their directors will not be liable (to the maximum extent permitted by law) for any loss or damage arising as a result of reliance being placed on any of the information contained in this publication. None of Russell Investment Group Limited, any member of the Russell Investments group of companies, their directors or any other person guarantees the repayment of your capital or the return of income. All investments are subject to risks. Significant risks are outlined in the Product Disclosure Statements or the Information Memorandum for the applicable Russell Investments’ fund. Past performance is not a reliable indicator of future performance. The Product Disclosure Statements or the Information Memorandum for the Russell Investments’ funds (as applicable) are available by contacting Russell Investment Group Limited on 09 357 6633 or 0800 357 6633. Copyright © 2020 Russell Investments. All rights reserved. This information contained on this website is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments.
NZ1-00165-2020-09-29
