Asset Allocation for June 2017

Pro-european candidates have swung the elections in Western Europe that pulsed triggering the wave of optimism on stock markets in May. Corporate earnings season made “bulls” the winners once again.

The victory of Emmanuel Macron in Presidential elections in France and Angela Merkel’s party in municipal elections in Germany whittled all attempts of anti-euro and radical political powers to come to power in Europe. The possibility of deep European political crisis has blown over that allowed EUR to restore some positions against USD on the currency market.

American stock market was highly volatile in May. Donald Trump’s policy and actions continue to provoke grumbling in society and business operates in fiscal and foreign policy uncertainty. From the other hand S&P500 is currently trading at historical maximums. Investors believe in strong earnings in future periods.

To add, OPEC countries didn’t agreed to more cuts of oil production but only extend the period of restrictions. We expect WTI oil prices to trade between 45-55 USD/bl till the end of the year.

Threat and challenges in world markets:
-  BREXIT aftermath – EU disruption and political crisis 
-  Monetary policy tightening by US FED

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