Invest
Positive market signals not cause for complacency
Markets have seen a number of positive developments in recent months but a global investment management firm has cautioned investors to nevertheless adopt a defensive approach to their portfolios.
Positive market signals not cause for complacency
Markets have seen a number of positive developments in recent months but a global investment management firm has cautioned investors to nevertheless adopt a defensive approach to their portfolios.
Both equity and credit markets have enjoyed solid performance over the past few months as the global recovery continues and GDP growth is modest but sustainable, investment management firm Pimco noted in its mid-year asset allocation outlook.
Earnings for the first quarter of the year exceeded expectation and look to be on track for a strong second quarter as well, oil prices have remained relatively stable, and markets have been benign in their responses to major political events, the company said.
Despite this, Pimco said investors should take on a “defensive stance” and thoroughly consider the potential downside risks their portfolios face.
“However good the backdrop, one cannot help but notice that all these positive developments are widely discussed and well-known by most investors, and therefore already reflected in asset prices,” the company explained.
“As usual, markets will want more good news to fuel the rally, and this is where the problem lies – there aren’t any obvious catalysts on the near-term horizon to surprise markets in a good way.”
Pimco said its base case was that many of the known risks will “remain at bay”, but added that there were now too many risks on the horizon for them to be ignored.
Examples of these risks given by the company were “disappointing” inflation figures globally, the current US administration’s lack of progress in enacting tax reform, several central banks’ untested balance sheet reductions, and regulatory reforms in China.
“Balancing the risks against the backdrop of buoyant markets, it is a good time to pause and scan the horizon for new directions the markets may take,” Pimco said.
“The lack of near-term positive catalysts combined with the current valuations does not offer sufficient margin of safety to support a risk-on posture.”
RELATED ARTICLES
Stock market
Sun Silver to make its ASX debut with a $13 million IPO
Sun Silver Limited (proposed ASX Code: "SS1") has announced the opening of its Initial Public Offering (IPO) today, aiming to raise a minimum of $10 million and a maximum of $13 million (before costs)Read more
Stock market
Nasdaq hits record high, underscores the value of tech in investment portfolios
The Nasdaq Composite's surge to an all-time high last Friday highlights the importance of incorporating technology into investment strategies. Read more
Stock market
Apple sets an unprecedented profit pace within the GAFAM group in 2023
After navigating through the economic difficulties presented in 2022, the technology sector has demonstrated resilience and growth, with many companies seeing increases in revenue and stock value. Read more
Stock market
Fintech startup okoora unlocks over $3 billion in forex savings for businesses
Fintech innovator okoora has announced it has saved customers a monumental amount over $3 billion through international foreign exchange transactions. Read more
Stock market
Google's Gemini edges out ChatGPT4 in groundbreaking AI showdown
Google's latest AI model, Gemini, has edged out OpenAI's ChatGPT4 in a recent set of rigorous multi-discipline tests, marking a significant milestone in the large language model (LLM) sector. Read more
Stock market
China's travel and spending surpass pre-pandemic levels, sparking optimism on stock markets
The recent report indicates that Chinese consumers have been travelling and spending more than they did in the same period of 2019, marking a positive turnaround for the Chinese economy. Read more
Stock market
US inflation data sends shockwaves through financial markets
Yesterday, a new set of inflation data from the United States sent tremors through the financial markets, as it came in stronger than anticipated. Read more
Stock market
State Street boosts global ETF operations with enhanced API technology
State Street Corporation has recently announced a significant upgrade to its Fund Connect ETF portal by enhancing the Application Programming Interface (API) capabilities, extending its services to ...Read more
Stock market
Sun Silver to make its ASX debut with a $13 million IPO
Sun Silver Limited (proposed ASX Code: "SS1") has announced the opening of its Initial Public Offering (IPO) today, aiming to raise a minimum of $10 million and a maximum of $13 million (before costs)Read more
Stock market
Nasdaq hits record high, underscores the value of tech in investment portfolios
The Nasdaq Composite's surge to an all-time high last Friday highlights the importance of incorporating technology into investment strategies. Read more
Stock market
Apple sets an unprecedented profit pace within the GAFAM group in 2023
After navigating through the economic difficulties presented in 2022, the technology sector has demonstrated resilience and growth, with many companies seeing increases in revenue and stock value. Read more
Stock market
Fintech startup okoora unlocks over $3 billion in forex savings for businesses
Fintech innovator okoora has announced it has saved customers a monumental amount over $3 billion through international foreign exchange transactions. Read more
Stock market
Google's Gemini edges out ChatGPT4 in groundbreaking AI showdown
Google's latest AI model, Gemini, has edged out OpenAI's ChatGPT4 in a recent set of rigorous multi-discipline tests, marking a significant milestone in the large language model (LLM) sector. Read more
Stock market
China's travel and spending surpass pre-pandemic levels, sparking optimism on stock markets
The recent report indicates that Chinese consumers have been travelling and spending more than they did in the same period of 2019, marking a positive turnaround for the Chinese economy. Read more
Stock market
US inflation data sends shockwaves through financial markets
Yesterday, a new set of inflation data from the United States sent tremors through the financial markets, as it came in stronger than anticipated. Read more
Stock market
State Street boosts global ETF operations with enhanced API technology
State Street Corporation has recently announced a significant upgrade to its Fund Connect ETF portal by enhancing the Application Programming Interface (API) capabilities, extending its services to ...Read more
