Low dynamism in the American job market, sharp acceleration of inflation in the eurozone in March, Asian companies are showing more caution – what to remember from the news this week.
Since the beginning of the year, the markets have been marked by a series of geopolitical events. While the American military intervention in Venezuela was largely ignored by the markets, the war in the Middle East has caused a sharp rise in energy prices, with repercussions on global markets. As a result, stocks have declined globally, while bond yields have increased. Investors anticipate strong measures from central banks, as they are focusing heavily on inflation, while concerns related to growth are currently taking a backseat. We only partially share the market’s view, but believe that growth could be weakened if prices remain high for a long period.
The impact of the crisis on stocks has not been consistent. Energy-importing countries, as well as those that were performing well before the start of the war, were more affected. Despite a more uncertain environment, the performance since the beginning of the year in some emerging markets, especially in Latin America and Europe, has been better than in the United States. This crisis reinforces our belief that diversification* among different geographic areas, such as emerging markets, Japan, and Europe, is essential to strengthen portfolio resilience in the long term.
*Diversification does not guarantee a profit and does not protect against losses.
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