US: Market implications of possible shifts in world order – Danske Bank

Research Team at Danske Bank, lists down the market implications of recent possible shifts in world order.

Key Quotes

“So far, markets have taken a relatively sanguine view on the impact. Equity markets have generally rallied, apart from a few badly hit emerging markets such as Mexico and Turkey, probably because the underlying global economic recovery is fairly strong and there are prospects of a more expansionary fiscal policy in the US. As a result, we are overweight equities. However, markets are now clearly waiting for concrete economic policies from the Trump administration, with both the upward move in US yields and the US dollar losing some momentum.”

“Furthermore, we think there is an increasing chance that global risk sentiment could be affected by a possible stand-off between China and the US. More long-term there may be risks to a global recovery from more protectionism in the world economy. The IMF this week flagged these risks in its global economic update.”