UK - Market liquidity created by interest rate cuts has been the chief driver of the equity rebound, according to Tony Broccardo, chief investment officer of Invesco UK's institutional arm.
Presenting the views of Invesco’s Global Asset Allocation Committee (GAAC) on the international equity upswing following the post-September 11 low, Broccardo added that the advance partly reflected the reduction in uncertainty with the passage of time.
“As we expected, the crisis prompted an aggressive response from the US Federal Reserve,” he said.
“The last cut, coming on November 6th, took the Federal funds target rate down to just 2.0%, its lowest level for 40 years.”
Broccardo revealed that there could still be one more US rate cut in the pipeline:
“We now expect a 1.6% rate across the Organisation for Economic Co-operation and Development (OECD) in 2002, there could be substantial easing yet to come from the European Central Bank (ECB),” he said.
Broccardo said the US economy will also be supported by a fiscal injection that could amount to 1.75% of GDP over 2002.
He added that Invesco expects the US economy to expand at a 0.9% rate over 2002, with growth probably resuming by mid-year. The company’s forecast for the OECD also stands at 0.9%, with the UK and Europe growing more rapidly than the US, but Japanese activity at best flat.
Broccardo concluded: “Over the course of the last month, our quantitative models have become even more bullish about the six-month outlook for global equities – primarily because of the recent weakness of business confidence indicators.
“Equities continue to be favoured over bonds, with both being preferred to cash.”
By Janet Du Chenne
Females can expect to live a greater number of years in poor health than males, according to data from the Office for National Statistics (ONS) for 2015 to 2017.
Scottish higher-rate taxpayers will benefit from more pensions tax relief than workers on the same salary anywhere else in the UK as income tax bands continue to diverge.
Schemes risk breaking the law and being forced to wind up as The Pensions Regulator (TPR) warns some may be master trusts but do not know so.
As a hectic 2018 draws to an end, Jonathan Stapleton wishes readers a quieter 2019.