Global stock markets moved higher in September following the falls in August, which were caused by escalating US-China trade tensions. Bond yields rose slightly from their recent cycle lows. Last month the Federal Reserve cut interest rates by 0.25%, while the ECB announced several easing measures including a rate cut, restarting quantitative easing (QE) and improving lending terms for banks. There remain longer-term concerns over growth, particularly outside of the US. Germany and Hong Kong are likely to be the first regions to record two quarters of shrinking GDP in a row, the definition of a technical recession. Global manufacturing remains in its own recession whilst the global service sector, which had been holding up rather well, has started to feel the pinch. With equities now running up against resistance, a new impetus is needed. This could come from US-China trade negotiations or from expanding fiscal policy.

With many bond markets now in negative yield territory, Zurich believes it makes sense to take a positive stance on equities. READ MORE