Investors Challenged by Rising Rates and Trade War

Following a strong 2017 for many growth assets, 2018 has seen a return to more challenging conditions

Cyrique Bourbon 4 July, 2018 | 7:56AM

trade volatility stock market US equities trade war interest rates

It’s undoubtedly been an interesting time for global investment markets. Following a strong 2017 for many growth assets, 2018 has seen a return to more challenging conditions. Confirmation of the continued upward path for interest rates in the United States, combined with escalating trade tensions has resulted in volatility not seen since early 2016. This comes just as the European Central Bank slows its stimulus program, ensuring there is no shortage of uncertainty to be navigated by investors.

Against this difficult backdrop, equity markets have, nonetheless, managed to post impressive medium-term returns. Emerging markets have borne the brunt of the recent volatility, especially in China, yet have still delivered healthy gains over the last twelve months. Returns from Japanese and United States equities over the past twelve months have also been strong with U.S investors further buoyed by corporate tax rate cuts and solid earnings results.

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About Author

Cyrique Bourbon  is multi-asset portfolio manager for Morningstar Investment Management EMEA

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