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LGT Beacon: Reiterating our cautiously constructive market outlook

October 16, 2019

Despite the so-called trade war, China's CSI 300 has rallied almost 30% year-to-date and the S&P 500 is up about 15%. Investors, it seems, are learning to live with the intensifying great power rivalry. With upward momentum having started to return to the markets, we keep our modest overweight in equities and our clear preference for the US.

Today we revisit our macro outlook and update our currency positioning. In addition, with the United Kingdom formally scheduled to exit the European Union on 31 October, we offer some thoughts on the so-called Brexit.

With regard to the macro situation, we reiterate and review the key points of our tactical positioning for the coming months. In brief, we keep equities at a modest overweight, favoring the US as a region, and sustainable, well-governed quality companies as a fundamental approach. We also continue to hold a pronounced underweight in fixed income (except in the emerging markets, or EM). However, we decided to close a long Norwegian krone (NOK) position against the Swiss franc (CHF) after a policy shift by the Norges Bank. Finally, we hold on to a long position in gold.   

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Note: The next edition of the LGT Beacon is scheduled for November 2019.