Market Overview: Inflation Rising in Eurozone, Asian Businesses Cautious
Weak job market dynamics in the US, sharp acceleration of inflation in the eurozone in March, and Asian companies showing more caution – here’s what to note in this week’s news.
Since the beginning of the year, markets have been marked by a series of geopolitical events. While the US military intervention in Venezuela was largely ignored by the markets, the war in the Middle East led to a significant increase in energy prices, with repercussions on global markets. As a result, stocks declined globally while bond yields increased. Investors expect strong actions from central banks as they focus heavily on inflation, with growth concerns currently taking a back seat. We partially share the market’s opinion but believe that growth could be weakened if prices remain high for an extended period.
The impact of the crisis on stocks was not uniform. Energy-importing countries and those with strong performances before the war began were more affected. Despite a more uncertain environment, the performance since the beginning of the year in some emerging markets, particularly in Latin America and Europe, has been better than in the US. This crisis reinforces our belief that diversification* among different geographical regions, such as emerging markets, Japan, and Europe, is essential to strengthen portfolio resilience in the long term.
* Diversification does not guarantee profit and does not protect against losses.
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