23.08 Liontrust Views Summer 2023 Literature (Single) - Flipbook - Page 5
RISKS
The froth in AI-related technology stocks
downturn is more likely in 2023 than a
with only a few stocks leading the market
deep recession because central banks will
rally emerged in the second quarter. But
work to avoid it and the global economy
how far central banks will go to tame
remains on a fairly solid footing. Underlying
inflation continues to be the most prominent
core inflation remains sticky in developed
risk because of the potentially negative
economies, albeit with signs of moderation,
impact on the global economy. Fears of a
but it was never likely to return to the golden
recession are still persistent, but they remain
target of 2% in just a few months. The war in
stable. We continue to believe that a mild
Ukraine continues to pose geopolitical risks
and can spur uncertainty at any time, such
as the Wagner Group revolt, but deadlock
appears to have set in.
FINANCIAL
MARKETS
Investor sentiment stabilised early in the second
were eased by the end of the month when the
quarter of the year after the jitters caused by
House of Representatives passed the required
the financial sector in March, helped by data
bill. Although global equities mostly ground
pointing to economic resilience in developed
higher, with the notable exception of the UK,
economies. The mini-banking crisis has largely
bonds weakened as expectations increased
disappeared off investors’ radars. The most
that tougher action would be needed by
significant news in an otherwise relatively quiet
central banks to tackle inflation. Higher
quarter was the political standoff regarding
interest rates tend to be damaging to equities
the US debt ceiling. However, market fears
and bonds, but especially the latter.
CONCLUSION
Investor confidence has subsided from earlier
financial assets can be purchased at lower
this year. Markets are giving more credence
prices, especially after the corrections seen in
to central banks’ warning that interest rates
2022. Long-term investors who are happy to
would have to stay higher for longer to
invest when others are fearful might consider
deal with stubborn inflation. However, the
now to be a time to be more optimistic –
uncertainty weighing on markets means that
although they should never be too greedy.
LIONTRUST VIEWS – SUMMER
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