Matthew Strachan

Concerns over economic outlooks and runaway government deficits, would appear at odds with the strength of global stock markets. However, despite the worries of tariff disruptions corporate earnings have held up well and the AI train continues full steam ahead. Equities are also buoyed by expectations of interest rate cuts, from the Federal Reserve Bank, and potential inflows from money market funds. Although markets are likely to be supported in this environment, we are alert to the elevated risks that might trip markets up. If inflationary data remains above target in the US, markets might have to revise their interest rate expectations. If any of the rosy assumptions around AI get called into question, valuations are very vulnerable. And the unprecedented level of market concentration creates index risk. We maintain our gold exposure and are skewed away from US concentration risk.

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