Barclays Recommends Investors Lean towards Equities
25 June 2015 - 10:30PM
Business Wire
Global Outlook report sees equities performing
well, especially in Europe and Japan
More than six years into the recovery, investors should
anticipate lower returns going forward due to relatively expensive
valuations in both fixed income and equities, and the gradual
emergence of a self-sustaining economic recovery, according to
Barclays’ latest flagship quarterly research publication Global
Outlook: Navigating a lower return environment.
“We are no longer in an environment of a rising tide lifting all
boats,” said Larry Kantor, Head of Research. “Extraordinary support
from monetary policy helped to push prices of both equities and
bonds to great heights. Now we are moving into a phase of the
business cycle where labor markets are improving and wages and
inflation are bottoming, suggesting a reduced degree of support
going forward.”
With global economic activity expected to rebound after a weak
first quarter, equities should perform reasonably well over the
next few months, especially in areas such as Europe and Japan where
earnings growth should be strong. Other cyclically sensitive assets
such as base metals and emerging market equities should also
benefit, especially since China is expected to be an important
contributor to the growth rebound in the second half.
Federal Reserve tightening is expected to be gradual when it
commences, likely later this year. Additionally, the European
Central Bank is expected to follow through on its massive
quantitative easing program. As the divergence in policy between
the Federal Reserve and the European Central Bank develops, we
expect the euro to resume falling, eventually breaking parity.
The crisis in Greece, China’s economic slowdown, and the
prospect for a Federal Reserve rate hike all pose risks to markets
globally. While each of these risk factors can unsettle markets, a
serious setback in China would be the most likely to have lasting
effects on the global economy and financial markets due to China’s
significance to global growth. However, this setback is not likely
to take place this year, as Chinese growth is expected to pick up
in the second half of the year. Additionally, neither the first
Federal Reserve rate hike nor the Greek crisis should derail the
recovery in economies or financial markets.
Barclays’ Global Outlook report, published quarterly, provides
an assessment of all major economies and markets, and outlines
recommendations for investors.
Barclays is an international financial services provider engaged
in personal, corporate and investment banking, credit cards and
wealth management with an extensive presence in Europe, the
Americas, Africa and Asia. Barclays’ purpose is to help people
achieve their ambitions – in the right way. With 325 years of
history and expertise in banking, Barclays operates in over 50
countries and employs over 130,000 people. Barclays moves, lends,
invests and protects money for customers and clients worldwide. For
further information about Barclays, please visit our website
www.barclays.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20150625005244/en/
BarclaysJames White, +44 (0) 20 7773
2800james.white@barclays.comorErica Chase, +1
212-412-6830erica.chase@barclays.com
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