| John Mayer, Chief Investment Officer of GlobalX |
The US interest rate hike round will continue until the end of the year, the market is pricing for longer-term inflation, and those who will benefit from current market conditions are the defensive stocks.
Last week, and he is expected to make an increase of at least a quarter of a percent in each of his monthly meetings by the end of the year. What was interesting in the words of Fed Chairman Jerome Powell was the fact that he noted that the “too high”, but at the same time, reduced the risk of recession.
Indeed, given the high rates in the US, the risk in the near term seems to be hyper-inflation rather than recession. -25 basis points – which indicates that the market expects inflation to persist for a longer period of time.
The continuation of the war in Ukraine and the sanctions on Russia are expected to continue to push up energy and commodity prices. In the current environment, we at GlobalX anticipate that stocks from defensive sectors such as healthcare and sectors that benefit from high inflation, such as real estate, energy and raw materials, will lead to price increases by the end of the year.
In general, the negative real returns, resulting from high inflation alongside economic growth, will support the stock market, as a result of the influx of positive return channels.
However, the positive momentum in the stock market is expected to be limited, against the background of interest rate increases, geopolitical instability and strengthening e. In such market conditions, it is advisable to implement more defensive strategies, such as investing in dividend-bearing stocks.
The author is a senior investment manager at the GlobalX mutual fund company. The above should not be construed as investment advice, recommendation or opinion regarding any financial products.