Equity rally takes a breath

Paris, 04/09/2017

 

By 

Varun Ghotgalkar, 

Strategist (Equities) - AXA IM R&IS

Equity market monthly review

 

Key points

  • August was a mixed month for global equity markets, marked by volatility that stemmed from geo-political concerns over the potential escalation of conflict between the US and North Korea. This marked the third volatility spike this year as a result of political uncertainty.
  • The Q2 earnings season was robust with most major regions and sectors posting growth and beating consensus expectations. But earnings momentum appears to have peaked and is now deteriorating slightly in major regions.
  • Earnings are expected to be the key driver of equity market performance, in the context of rich valuations and tightening global liquidity. Our regional allocation within equities remains the same, with an underweight in the US and an overweight in emerging markets (EM) and the euro area.