Not the time for big macro investment calls, but be selective

ELEVATED volatility and continuing uncertainty in the macroeconomic environment mean this is not the right time for “broad-strokes” investing, says Fabiana Fedeli, chief investment officer (equities and multi-asset) of M&G Investments.

““By ‘broad strokes’, we mean this isn’t a market for big macro calls, where you bet on the market direction; (neither is this a market) for sector or country calls,’’ she says. “In the end, what really matters to equity markets is earnings. And what matters to fixed income markets is the yield that you can get, with enough cushion to offset other concerns.”

This year, markets have been largely driven by news flow, particularly relating to inflation and what the Federal Reserve might do. US stock indices surged in November, as a tamer-than-expected inflation in October fuelled the expectation that the Fed could stay its hand on interest rate hikes. But recent strong economic data – service sector activity and factory output – put paid to those expectations, and stocks fell sharply this week.