By Charlie Conchie
The “clouds have started to lift” on the global economy and investors are beginning to warm to the idea of backing stocks again, according to a UBS executive.
In a note on Monday UBS Global Wealth Management’s investment chief Mark Haefele said the strains of rising interest rates globally had begun to cool as the US central bank toned down the speed of its rate hikes.
“We saw two serious and acute risks to markets in the first half of this year – weakening corporate profits and falling real wages – as the Federal Reserve pressed ahead with the fastest rate-hiking cycle since the 1980s,” Haefele said in a note.
“But recently, the clouds have started to lift, with recession risks receding and the equity outlook more balanced.”
The Fed is likely now done raising interest rates and a majority of economists now expect the central bank to wait at least to the end of March before cutting them, according to a recent poll of top economists by Reuters.
Rising interest rates and volatility across the world have pushed investors away from the stock market over the past year, but there have been recent signs of a more rosy outlook among top fund managers.
A closely-watched poll of investors with some $454bn in assets under management found that they are still of the view that global growth will weaken in the next 12 months but expectations have improved significantly.
Three quarters of respondents expect a soft landing or no landing in global growth and the proportion of those predicting weaker growth fell to 45 per cent down from 60 per cent in July.
