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Are the markets too sanguine about risk?

by Helen Harjak on Jul 16, 2014 at 00:01

‘Core fixed income markets are likely to come under some pressure in the second half of the year as the uncertainties hanging over the US recovery are lifted,’ added Flanders.

While US stocks are vulnerable to an exogenous shock, such as deteriorating events in Iraq, Koesterich continues to believe that, while bargains are few and far between, opportunities can still be found.

He added: ‘Japanese equity valuations, for instance, are currently among the lowest in the developed world despite Japanese stocks’ recent advance. At the same time, recent market-friendly actions by the European Central Bank could support European stocks over the next few months. For those looking to put new money to work, we would consider cheaper alternatives outside of the United States, including Japan, Europe, as well as certain emerging markets.’

*Source: FE Analytics as at 8 July, TR, US$ terms

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