[ad_1]
There has been a very strong performance for risk assets during the fall, and the performance was bolstered by a “favorable outcome for investors in the US elections.” The many positive news about vaccines have also contributed to the rally in the stock market, with strong gains for equity markets and continued declines in risk premiums.
Many question marks in the markets before autumn have been “cleared up in a positive sense,” writes the Bank of Åland on the market outlook. In addition to the US elections and the covid vaccine, the reporting season during the fall was also positive, which was reflected in the financial markets.
“An extremely strong rematch in risky assets from spring price lows means the stock market is somewhat overbought in the short term, which may contribute to a volatile end of the year, but we expect the underlying trend to pick up. keep positive, “writes the Bank of Åland.
In equities, the Bank of Åland outperforms the Nordic region, which the bank believes will benefit from its cyclical nature when the recovery hits. On the other hand, the valuation is considered to be a bit inflated.
America is also overweight. There are many growing companies here that are benefiting from the persistently low interest rate situation, at the same time that the strong recovery has raised valuations.
The new US president doesn’t have much room for any major fiscal stimulus packages or opportunities to implement major tax increases, as Congress is divided by a Democratic majority in the House of Representatives and a Republican majority in the Senate.
“The main responsibility for stimulus policy is returned to the central bank, which means low bond yields and a flatter yield curve,” writes the Bank of Åland.
On the other hand, the Bank of Åland underestimates Europe as the recovery in Germany and France comes from low levels.
Emerging markets are also underweight, despite the fact that China is in a clear recovery phase. The Bank of Åland believes, however, that there is still very little activity in several of the country’s export markets. The positive for emerging markets is a weak dollar and rising commodity prices.
