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Schroders Investment Weather Forecast: Global equity outlook finely balanced

The outlook for global equities in 2015 is finely balanced. While a strong US recovery and falling oil prices are supportive of global equity performance, concerns in Europe and emerging economies like Brazil may weigh on sentiment.

12/03/2015

Alex Tedder

Alex Tedder

Head of Global Equities

A US-led recovery

The positive for equities is that the US is leading the global recovery and the economy continues to power ahead. Economic data generally has been strong and that is expected to continue in 2015.

Oil price slump to aid consumption

For countries that are very dependent on oil like India, Indonesia and Japan, the fall in oil prices provides a significant boost to consumers and to companies operating within those countries.

European risks remain

The principal danger for global equities is the continued weakness in developed market economies like Europe. The region looks to be at real risk of deflation in 2015 and that would be negative for global equities overall.

Oil stripping Brazil of purchasing power

While the oil price trend is positive for some emerging market countries, it is negative for others such as Brazil, which is a big oil exporter and is suffering badly from the decline in energy prices.

Overview

While the recovery in the US is boosting investor optimism, the falling oil price is having both positive and negative impacts on emerging market economies. This, combined with concerns in Europe, could weigh on global equities overall in 2015.