Key points:

  • Global equities have held up fairly well in light of the generally negative news flow, entirely driven by the United States, where stocks are up 9.6% year to date, while the euro area, Japan and emerging markets have underperformed. Broader style and sector leadership remains intact with cyclicals and growth outperforming defensives and value.
  • Earnings momentum remains robust with the second quarter earnings season posting positive growth and surprising on the upside across most major regions. The outlook remains on track with global earnings expected to grow by 9.8% in 2019, with the financial, technology and consumer discretionary sectors driving the bulk of the growth.
  • We remain overweight global equities given valuations appear to be less of a risk now, while earnings growth remains supportive underpinned by robust corporate activity. So far we see no meaningful evidence that recent developments on the trade front have spilled over into the outlook for earnings but believe it poses a key risk going forward.

Global equity markets hold firm despite recent developments

Global equity markets were flat over the past month. In the US, the S&P 500 index made new all-time highs supported by continued strength in the technology and consumer discretionary sectors. Euro area equites dropped by 3.9%, weighed down by political noise and stalling growth momentum, while emerging markets also continued to underperform. Year to date, global equity markets have held up fairly well in light of the negative news flow, and are up 4.2% entirely driven by the United States (where stocks are up 9.6%) while the euro area, Japan and emerging markets (EM) have underperformed. On the sector front, cyclicals remained in poll position over the past month with the healthcare (1.4%), technology (1.3%) and consumer discretionary (0.4%) sectors leading the pack. Defensives and commodity plays have underperformed, with consumer staples (-1.8%), telecom (-1.4%), materials (-2.8%) and energy (-1.3%) posting negative returns (Exhibit 2). Broader style leadership remains intact so far this year with growth winning and value continuing to underperform...


This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date. All information in this document is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document. Furthermore, due to the subjective nature of these opinions and analysis, these data, projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. Any reproduction of this information, in whole or in part is, unless otherwise authorised by AXA IM, prohibited.

Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent.

This document has been edited by AXA INVESTMENT MANAGERS SA, a company incorporated under the laws of France, having its registered office located at Tour Majunga, 6 place de la Pyramide, 92800 Puteaux, registered with the Nanterre Trade and Companies Register under number 393 051 826. In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.

© AXA Investment Managers 2018. All rights reserved