State Street Global Advisors Release Mid-Year Global Market Outlook: Look Beyond the Noise as Cycle Extends
June 24 2019 - 7:00AM
Business Wire
State Street Global Advisors, the asset management business of
State Street Corporation (NYSE: STT) has today published its 2019
Mid-Year Global Market Outlook, providing a medium-term forecast
for global markets. While trade risks have come sharply into focus
in recent months, we continue to see room for moderate global
economic growth given the Fed’s more accommodative policy
stance.
“Looking back over the last year, we can see that the biggest
lesson is to look through the noise and to focus on where
fundamentals might take us over the longer term,” said Rick
Lacaille, global chief investment officer at State Street Global
Advisors. “We see potential for the economic cycle to extend,
especially in the US where there is considerable momentum, but
continue to monitor trade developments carefully.”
“First quarter growth in the US and globally was not as bad as
feared and, while wage inflation has risen, inflation overall
remains manageable,” commented Lori Heinel, deputy global chief
investment officer for State Street Global Advisors. “Last
December, markets became overly concerned about the outlook for
global growth, thanks to the impact of the US-China trade conflict
and what many saw as the Fed’s overly hawkish tightening schedule.
Today trade risks persist, but the policy stance has shifted.”
Equity market growth should continue, with spikes in
volatility
Macro factors should, therefore, continue to support earnings
growth but investors need to be cautious as volatility could easily
spike given the significant geopolitical and growth risks facing
the global economy.
“We remain overweight equities amid significant policy support
but believe that investors should maintain a defensive bias as
fundamentals disconnect from returns and trade risks mount,” said
Bill Street, head of Investments EMEA at State Street Global
Advisors. “Equity valuation multiples relative to the length of the
current cycle (longest on record), and past cycles, should prove
justified if trade risks moderate and earnings growth comes through
towards the latter part of 2019.”
China and India drive growth despite trade risks
Rising protectionism from developed markets such as the US
remains an important risk for emerging markets. But State Street
Global Advisors believes that the growth stories of two of the
largest countries – India and China – continue to offer
opportunities for investors in both the equity and debt space.
“Emerging market equity valuations relative to other regions are
at all-time lows, while earnings per share and sales forecasts are
holding up well,” highlighted Kevin Anderson, head of Investments
in the Asia Pacific region at State Street Global Advisors. “We
think emerging markets are attractive and the long-term growth
story is intact although risks remain with the ongoing US-China
trade dispute. For fixed income investors, higher-yielding emerging
market debt should drive long-term returns despite local currency
volatility in the short run. Overall, the stabilization of the
Chinese economy is also positive for emerging markets.”
Climate risks increasingly salient among investors
Climate-related investment risks have moved up the agenda in
2019, with a broader discussion of how climate change may have
potentially systemic effects on financial markets and threaten
business models and long-term asset values across a range of asset
classes and sectors. “At State Street Global Advisors, we have
developed new tools to identify and monitor climate risks at a
security level and new strategies for investors to mitigate their
climate exposures to take advantage of new opportunities,” said
Rick Lacaille, global chief investment officer at State Street
Global Advisors.
To see State Street Global Advisors’ full 2019 Mid-Year Global
Market Outlook content, visit ssga.com/GMO.
About State Street Global Advisors
For four decades, State Street Global Advisors has served the
world’s governments, institutions and financial advisors. With a
rigorous, risk-aware approach built on research, analysis and
market-tested experience, we build from a breadth of active and
index strategies to create cost-effective solutions. As stewards,
we help portfolio companies see that what is fair for people and
sustainable for the planet can deliver long-term performance. And,
as pioneers in index, ETF, and ESG investing, we are always
inventing new ways to invest. As a result, we have become the
world’s third largest asset manager with nearly US $2.80 trillion*
under our care.
* This figure is presented as of March 31, 2019 and includes
approximately $33 billion of assets with respect to SPDR products
for which State Street Global Advisors Funds Distributors, LLC
(SSGA FD) acts solely as the marketing agent. SSGA FD and State
Street Global Advisors are affiliated.
Important Risk Information:
Because of their narrow focus, sector funds tend to be more
volatile than funds that diversify across many sectors and
companies. Equity securities may fluctuate in value in response to
the activities of individual companies and general market and
economic conditions. Bonds generally present less short-term risk
and volatility than stocks, but contain interest rate risk (as
interest rates rise, bond prices usually fall); issuer default
risk; issuer credit risk; liquidity risk; and inflation risk. These
effects are usually pronounced for longer-term securities. Any
fixed income security sold or redeemed prior to maturity may be
subject to a substantial gain or loss. Non-diversified funds that
focus on a relatively small number of securities tend to be more
volatile than diversified funds and the market as a whole.
Passively managed funds hold a range of securities that, in the
aggregate, approximates the full Index in terms of key risk factors
and other characteristics. This may cause the fund to experience
tracking errors relative to performance of the index.
https://www.ssga.com/global/en/our-insights/state-street-global-advisors-worldwide-entities.html
The whole or any part of this work may not be reproduced, copied
or transmitted or any of its contents disclosed to third parties
without SSGA’s express written consent.
Web: www.SSGA.com
© 2019 State Street Corporation - All Rights Reserved
Tracking number: 2603733.1.1.GBL.RTL
Expiration date: 06/30/2020
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State Street Corporation Imran Khan +44 20 3395 3791
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