From Morningstar: 2024-11-04 06:41:41

The financial markets are preparing for the upcoming presidential election in the US, with expectations of increased volatility post-election. Tech and growth stocks are resilient, while European export stocks may be impacted by potential tariff changes. Emerging assets are seen as a good investment in any scenario. Interest rates have risen sharply recently, presenting potential opportunities for investors.

In terms of equity markets, there are both expensive and less expensive markets globally. HSBC Management prefers a scenario of extended growth with a focus on value and defensive sectors. Interest rates, US deficit, and inflation are key factors influencing market performance. Defensive stocks are favored due to potential economic slowdown scenarios.

Regarding fixed-income markets, interest rates in the US have risen significantly recently. There is an opportunity to lengthen duration to capture higher long-term yields. Quality credit, government bonds, or investment-grade bonds are recommended for investors seeking yield. Private debt is highlighted as a growing sector offering diversification and yield opportunities for investors.

Gold and bitcoin have performed well, but gold is seen as more vulnerable in scenarios of returning inflation. Bitcoin is considered a complicated asset class with uncertain correlations and high volatility. Private debt is seen as a more attractive option for investors due to yield, risk mitigation, and economic diversification benefits. The sector is expected to continue growing and competing with traditional bond portfolios.

Overall, investors should pay attention to the upcoming US presidential election and its impact on financial markets. Opportunities exist in emerging assets, defensive stocks, and private debt. Factors like interest rates, US deficit, and inflation should be considered when making investment decisions. Diversification is key to managing risk and generating returns in the current market environment.



Read more at Morningstar: US Elections: What Should Investors Do?