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Politics, growth and monetary policy to determine equity markets' fate in 2019

Publication Date: 31 Dec 2018 - By ReachX Team By ReachX T.

Macro Equity Fundamental Investment Strategies Multi Asset Equity Global


Looking ahead to 2019, primary risks to the outlook for equity markets in particular, and financial markets in general, relate to the extent to which global growth slows, and the monetary policy response to that slowdown, according to a City investment manager. 

In a communiqué to clients touching on the outlook for equity and financial markets in 2019, Abi Oladimeji, Chief Investment Officer at Thomas Miller Investment, said political developments on both sides of the Atlantic could have a massive bearing.

“Market expectations for the path of rate hikes in the US have changed materially over the past few weeks and market pricing currently indicates that investors now expect no more than a single hike by the US Federal Reserve in 2019,” Oladimeji noted. 

This is clearly far more dovish than the Fed has indicated at any point in the past year. Uncertainty about monetary policy will result in elevated levels of volatility over the course of the year.

“It is relatively easy to foresee important political flashpoints on both sides of the Atlantic over the next few months. 

"Notably, during the first quarter of 2019, markets are likely to have to contend with the combination of elevated risks from Brexit and potential ramifications of gridlock in Congress (e.g. US government shutdown or another debt ceiling crisis),” Oladimeji concluded.


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