The outlook for earnings remains constructive, with both the Eurozone and emerging markets at earlier stages of their recovery. The acceleration in capital expenditure investment is an important development in our view, suggesting a more stable and sustainable future growth rate.
Monetary policy in aggregate also remains supportive to risk assets. The speed of any subsequent tightening relative to market expectations is likely to remain key to market prospects, but we believe that central banks will act carefully and gradually in their bid to unwind ultra loose monetary policy in developed economies.
As ever, the ability of the Chinese authorities to rebalance the economy without sparking a large increase in debt defaults and a sharp slowdown in demand is also important for investor risk appetite global. We do not expect any major policy change in the coming months.