Markets are Shifting Away From Inflation and Towards Growth

Thursday 02 February 2023

Global Investment Views, Equity, Fixed income

   

Markets are Shifting Away From Inflation and Towards Growth

February 2023| Markets are shifting focus away from inflation towards growth, with a slightly less disruptive economic picture for Europe and a more optimistic view on China. Intra-market rotations also materialized, with cyclical stocks favored over defensive names in Europe and tech stocks in the US supported by expectations of a less aggressive US Federal Reserve. Going forward, four themes should be crucial: (1) inflation/growth balance; (2) central bank actions; (3) dollar weakening; and (4) the corporate earnings trajectory. Any negative growth and earnings surprise could drive markets lower while there are no short-term triggers for upside at current valuation levels.

01 |  Amundi Institute Insights: We think headwinds for the eurozone economy persist, but we expect growth and inflation to prove resilient.

02 | Fixed Income: We keep our marginally cautious stance on fixed income duration (core Europe and Japan, neutral US) but are vigilant regarding inflation, monetary policy, and yield movement dynamics.

03 | Equity: The likely negative effects of the rising USD last year on Q1 and Q2 corporate earnings, combined with record levels of profit margins, lead us to be cautious on mega-cap names in the US.

Global Investment Views - February 2023

Important Information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management US (Amundi US) and is as of January 31, 2023. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi US and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. Amundi Asset Management US is the US business of the Amundi Asset Management group of companies.

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