Pictet AM’s chief strategist Luca Paolini tried to redefine the concept of a market correction this week, urging investors to take advantage of a 2% fall in asset prices to “rebuild positions in riskier assets”.
The US equities rally has been given a fresh boost this year by continuing earnings upgrades and a weakening dollar. But Europe’s investors are not buying it.
Technology stocks have been among the top performers over the past 12 months. While forward-looking P/E ratios are not excessive on a long-term comparative basis, investors may consider cutting their exposure.
European-domiciled ETFs saw $11.1bn in net inflows in March, according to Blackrock. That’s an all-time record for the month. ETF investors in other parts of the world also joined the party in great numbers.
The dollar has rallied in recent days as investors believe stronger US GDP growth and Fed rate hikes will push the greenback up. But markets are ignoring the forces that are likely to drag the dollar down in the longer term.
While this decompression will have been welcomed by investors looking to buy into the market, it was the opposite for those at the long end of the curve, with10-year bond holders losing around 5% of their capital. Though the price shift made the headlines, rather than coming as a great surprise it has merely served…
