The economic outlook remains in “contraction” territory but continues to be supported by resilient activity in the services sector.
Valuations are “expensive”, driven by a fairly narrow market rally. We are focusing on sectors with more attractive valuations where possible, positioning portfolios for a broader recovery.
Momentum for equities has remained positive despite the most recent sell-off in September. This is a bullish signal in the short term.
Sentiment in markets has softened but remains in “neutral” territory as equity markets adjusted to the prospect of a tighter-for-longer monetary policy.
As ever, we are constantly monitoring markets. Should conditions change, particularly with regards to the economic regime or signals from our valuation, momentum and sentiment framework, we will adjust our asset allocation accordingly.
