The GIV elaborates on the latest views, convictions and outlook of our Global CIOs, Investment Platforms and the Amundi Investment Institute.
A breather after buoyant markets
The year is drawing to a close with most risk assets in positive territory, and global stocks and metal prices seeing multiple highs. Even the longest US government shutdown in history didn’t curb market enthusiasm. We think markets have been looking through the weakness in the belief that monetary and fiscal policy levers will be available for support, that profitability of AI investments is almost a given, and that corporate earnings will continue to exceed expectations, following a strong results season in the US, somewhat less so in Europe. The tariffs’ impact on consumption is also largely being ignored.
Agile duration: evolving inflation, policy
Economic growth in Europe is being affected by a cautious consumer, even as we expect disinflation to continue. Headline inflation in the EZ is likely to be below the ECB target by the year-end. Both these should lead the ECB to reduce policy rates. In the US, fiscal impulse amid US mid-term elections next year could put some pressure on the markets there.
Valuations favour a global approach
Equities have delivered strong returns this year to-date mainly due to both positive sentiment around AI and robust corporate earnings, despite mixed signals on economic activity in the US and Europe. Now, the primary question for us is how much of the good news is priced into valuations. Elevated levels increase the potential for a reversal if revenues or margins disappoint. Thus, any volatility before year end or next year beginning may present opportunities in quality businesses that benefit from structural growth drivers.
Adopt a more balanced stance on risk
In this current phase of a late-cycle economy, we are witnessing nuanced backdrops across different regions, even as global competition between the US and China continues. For instance, in Europe, economic growth will likely be decent but below potential, US consumption stays fine for now, but a softening labour market means this cannot be sustained. Thus, we are adapting our allocation stance to these nuances, and are looking for value across asset classes. In doing so, we keep a diversified stance towards regions where earnings, valuations and macro environment provide a good risk-reward. Thus, we stay risk- on, with mild adjustments, safeguards, and a positive view on gold.
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