MARKET OUTLOOK & TOP PICKS
Global equity markets appear to have taken a pause recently. After reaching new heights, equity markets have succumbed to fatigue and overbought technical conditions.
However, the fundamental backdrop for equity markets remains constructive with global economic data expanding and corporate earnings accelerating. As such, we expect the global economic expansion to extend through 2018 and to moderately lift global equity markets to new highs.
Of course, we anticipate more risks (and volatility) ahead as investors navigate central bank tightening measures, elevated stock valuations and potential further geopolitical distractions. In our view, taking advantage of any temporary sell-offs and ‘buying the dips’ would remain a prudent strategy.
Over the near-term, a final tax reform bill in the U.S. could provide an additional catalyst to stock prices as proposed corporate tax cuts would augment corporate earnings. In addition, we are currently in a seasonally stronger part of the calendar with the potential for a proverbial Santa Claus rally this month. Over the last 20 years, the S&P 500 has returned an average of +1.27 per cent for the December month and has been positive 15 of 20 occurrences.
In Stan Wong-managed portfolios, we are overweight in the financials, technology and consumer discretionary sectors, while underweight…