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Our multi-asset investment views - April 2024

We have upgraded our view on commodities to positive as an improvement in manufacturing activity will boost demand for industrial metals. Find out more about our views on a range of asset classes here.

22/04/2024
Multi-asset views

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Multi Asset Investments

🟢 Long / positive

🟡 Neutral

🔴 Short / negative


🔼 Up from last month

🔽 Down from last month

Main Asset Classes

🟢Equities

We have maintained our positive view on equities as economic growth remains solid both inside and outside of the US, and the cyclical backdrop remains supportive.

🔴 🔽Government bonds

We have downgraded bonds to negative as valuations are expensive and rate cuts may be pushed back to later in 2024 as inflation is no longer falling.

🟢 🔼Commodities

We have upgraded to positive, as manufacturing activity has improved in Europe and the US, leading to increased demand for industrial metals.

🟡Credit

We are neutral on credit because valuations are expensive, particularly in dollar denominated debt.

Equities

🟢US

We remain positive on US equities, as economic growth remains healthy, the labour market continues to grow, and US consumer confidence is strong.

🟡UK

We remain neutral as concerns surrounding the stickiness of inflation offsets the attractive valuations.

🟢Europe

We continue to expect the European economy to recover, which should be a strong catalyst for European equities.

🟢Japan

We retain our positive view as the fundamental picture has remained strong and the macro environment is supportive.

🟡 Global Emerging Markets1

The Chinese economy remains fragile which leads us to remain neutral given its considerable influence on emerging market equities.

🟡 Asia ex-Japan: China

We remain neutral as the People’s Bank of China hasn’t provided any meaningful economic stimulus.

🟡🔽EM Asia ex China

We have downgraded to neutral as any delays in cuts to US rates is likely to have a negative impact.

1Global Emerging Markets includes Central and Eastern Europe, Latin America, and Asia.

Government bonds

🔴 🔽 US

As inflationary risks have re-emerged, we have downgraded US government bonds because the first cut in rates, which was expected in June/July, is now likely to be pushed back to later in the year.

🟢 UK

We maintain our positive stance as UK Gilts are currently attractively priced as prices have fallen in sympathy with US Treasuries.

🟡 Germany

Market pricing has continued to reflect an expectation that rates will be cut soon, which the European Central Bank (ECB) has signalled is likely to begin in June.

🟡 Japan

The Bank of Japan (BoJ) has hiked interest rates, which are now positive. However, this has not yet had a material impact on bond prices, leading us to remain neutral.

🟢 US inflation linked bonds

We remain positive as there have been signs that inflation may be ticking up.

🟡 Emerging markets local currency bonds

Although we still believe a soft-landing is the most likely scenario, which would benefit EM rates, fears over US inflation and the subsequent impact on Federal Reserve (Fed) policy lead us to remain neutral.

Investment grade credit

🟡 US

We remain neutral as we think valuations are expensive.

🟡 Europe

Although we recognise that the value offered by European corporate debt is superior to many of its peers, we remain neutral because investors are not focusing on spreads.

🟡🔽Emerging markets USD

We have downgraded to neutral as valuations are expensive.

High yield bonds (non-investment grade)

🟡US

We remain neutral because valuations are expensive and current conditions mean downside risks still persist.

🟢 Europe

We remain positive as Europe is earlier in its credit cycle than other regions, and the ECB may be the first central bank to cut interest rates.

Commodities

🟡  Energy

We remain neutral as we believe that the market has priced in current market dynamics and OPEC compliance is low.

🟢 Gold

We maintain our positive view on gold as demand remains robust despite a slight weakening in real rates.

🟢 🔼 Industrial metals

We have upgraded to positive to reflect the recovery in manufacturing activity and tight supply dynamics.
🟡Agriculture

We remain neutral as the impact of El Nino is declining and the supply side remains stable.

Currencies

🟢US $

We retain our positive view as US growth remains firm.

🟡UK £

Although a soft-landing may be favourable for sterling, lingering concerns about stagflation keep us neutral.

🟡 EU €

The economic cycle is looking more favourable in Europe. However, widening interest rate differentials lead us to remain neutral.

🟡 CNH ¥

We remain neutral, reflecting the balance between weak economic growth and the impact of the uptick in the global goods cycle.

🟢 JPY ¥

We maintain our positive view as we believe that the currency should appreciate over the medium term as the BoJ slowly moves towards a policy of positive interest rates.

🔴Swiss franc ₣

As the Swiss Central Bank has been one of the first major central banks to cut rates, the increase in interest rate differentials keeps us negative on the currency.

Source: Schroders, April 2024. The views for equities, government bonds and commodities are based on return relative to cash in local currency. The views for corporate bonds and high yield are based on credit spreads (i.e., duration-hedged). The views for currencies are relative to the US dollar, apart from the US dollar which is relative to a trade-weighted basket.

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