GLOBAL - After a particularly productive fourth quarter, the consumer discretionary, industrials, materials, and information technology sectors halted their advances, according to State Street global Advisors' latest market commentary.
With paltry showings from the other sectors, virtually all the major global equity markets lost ground in January. REITs outperformed the broader equity market indices.
Though real estate fundamentals have weakened, investors have continued to favour companies with steady earnings streams, according to State Street.
State Street added that for the first time in over a year, the Federal Reserve board left the Fed funds target rate unchanged. Although the board appeared concerned about the upward trend in the unemployment rate, members seem optimistic that the US recession is nearly over.
With no indication that inflation will present an imminent threat, the Fed will likely leave rates at 1.75%, said State Street, and maintain its easing bias. Though the fixed income markets seemed to think the Fed may tighten sooner rather than later, consensus views tend to over-shoot when the economy is near a peak or trough.
State Street concluded: The Fed has never tightened before unemployment started falling and we don't believe it will until the recovery is well under way. Although the pace of deceleration in the economy has declined, risks remain skewed to the downside.
By Luke Clancy
Here are key takeaways from our 2019 Asset Allocation Outlook on how we are positioning asset allocation portfolios in light of our outlook for the global economy and markets.
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