Market Outlook – Adjusting to Uncertainty
Storebrand Asset Management
Storebrand Asset Management is the Nordic market leader in sustainable investment, with origins dating back to 1767.
The global economy is at a crossroads. Markets hit new highs in February, but by month-end, rising uncertainty had begun to weigh on investor sentiment. Our latest market outlook reflects this shift.
Key Points:
? Trade war escalation: Trump’s delayed 25% tariff increases on Canada and Mexico were implemented in early March. At the same time, new 25% tariffs on EU goods and 10% on China have been announced for April.
? Declining consumer confidence in the U.S.: Higher inflation expectations are weakening consumer confidence and fueling growth concerns, driving U.S. interest rates sharply lower.
? EU ramps up defense spending: Geopolitical tensions are leading to a clear increase in defense budgets, with the fiscal position of EU countries providing room for further expansion.
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Our Market Outlook:
?? Equities – Neutral Weight
After a strong start, global equities pulled back toward the end of February. Weaker consumer sentiment in the U.S. and concerns over increasing trade barriers have heightened market uncertainty. As a result, we are reducing our equity exposure and moving from overweight to neutral weight in global and Norwegian equities.
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?? Bonds – Neutral Weight
Global government bonds continued to rise in February, largely driven by falling U.S. interest rates. Growth concerns now outweigh inflation fears as markets react to global tariff increases. We maintain a neutral weight in government bonds and an overweight position in credit, reflecting a shift in risk sentiment.
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?? Money Market – Neutral Weight
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Volatility is increasing, and markets are adjusting to new economic realities. With trade policies shifting and consumer sentiment weakening, a more cautious and flexible investment approach is key.
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