23.08 Liontrust MA Quarter In Review Q2 Literature (Single) - Flipbook - Page 4
Our view of investment markets
• Investors’ sentiment might have stabilised in Q2 after the jitters
caused by the financial sector in March, helped by data pointing
to economic resilience in developed economies, but some of the
optimism seen at the start of this year after a bruising 2022 has
dissipated.
• However, we believe the broad consensus is that we are through
the worst of the inflationary increases. The supply chain issues,
Russia’s invasion of Ukraine and the poor harvests in mainland
Europe last year that drove inflation in 2022 now seem to be
receding, reflected by the falls in headline inflation this year.
• The mini banking crisis has largely dropped off investors’ radars,
but markets have become fickle, with excessive volatility driven
by over-reliance on whatever the latest data or news angle
dictates.
• Fears of a recession persist, but they remain stable. We believe
that the chances of a recession are much lower than those
reported in the media. We continue to believe that a mild
downturn is more likely in 2023 than a deep recession because
central banks will strive to avoid it, and the global economy
remains on a solid footing.
• Market sentiment is on a tightrope, thanks to inflation remaining
stubbornly high, but the general situation is not so dire either.
The key issue for markets continues to be whether interest rate
hikes will surprise on the upside and threaten economic growth
as central banks address inflation. The full impact of past hikes
has also yet to materialise.
• Corporates continue to generate good revenue. Non-runaway
inflation does not crash economies, although it can make it more
difficult for companies to operate.
• The uncertainty weighing on markets means that financial asset
prices still offer reasonable value. Now is an opportune time
to identify the positive potential in markets and put in place
investments for the long term.
• Nobody can say with any real certainty what will happen next
for inflation and interest rates. Core inflation, which central banks
worry about, is falling too but slower than hoped. Unfortunately,
this is stoking fears that rates will remain higher for longer.
%
The mini banking crisis has largely
dropped off investors’ radars,
but markets have become fickle,
with excessive volatility driven by
over-reliance on whatever the latest
data or news angle dictates
Nobody can say with any real certainty
what will happen next for inflation and
interest rates. Core inflation, which
central banks worry about, is falling too
but slower than hoped. Unfortunately,
this is stoking fears that rates will remain
higher for longer
4 - Liontrust Multi-Asset Funds and Portfolios Quarterly Report: Q2 2023
The uncertainty weighing on markets
means that financial asset prices still offer
reasonable value. Now is an opportune
time to identify the positive potential in
markets and put in place investments for
the long term
