Economic and market conditions remain positive despite cooling expectations, says Mark Rider.
In the wake of the global financial crisis, markets have made a steady recovery. The past 12 months or so have seen this continue, with a strong uptick after the election of Donald Trump.
But now, high expectations around the so-called Trump trade have largely washed out: the energy-commodities price surge is coming to an end and missteps by the Trump administration have eroded market confidence.
Other signs indicating that this 'reflation trade' has peaked are the cooling Chinese property market, easing inflation pressures and expectation that global financial conditions will tighten.
But this change in sentiment isn't expected to cause damage: with such factors as strong earnings growth keeping markets buoyant, the past 12 months have been a broad step in the right direction. And we don’t believe the reflation trade is over just yet.