TMCnet News
Russell Investments' Global Market Outlook: Strategists Expect a Shift From Darkness to Dawn in 2023 OutlookRussell Investments Canada Limited has released its 2023 Global Market Outlook, offering economic insights and market forecasts from the firm's global team of investment strategists. Regarding the "Canada Outlook," the team believes the Bank of Canada's (BoC) very tight monetary policy will soon catch up to highly indebted households and potentially take the Canadian economy into a shallow recession. Meanwhile, a slowing global economy will drag on commodity prices and challenge Canadian exports. "The good times of 2022 in terms of household spending and business investment may end in 2023, as the lagged effects of rate hikes are felt more intensely in the Canadian economy," said Shailesh Kshatriya, director, investment strategies at Russell Investments. "However, as a mild recession gains momentum and inflationary pressures moderate, we believe the conditions should be in place toward the latter half of the year to allow the BoC to shift its policy stance towards interest rate cuts." The team also points out a couple of bright spots for investors amid talk of a recession: bond yields are more attractive, offering improved income, and government bonds may benefit from recession-driven risk-off sentiment. In addition, the team remains positive on Canadian equities over the medium term due to better relative value and the potential for natural resource sectors to benefit from the energy transition. Regarding the Canadian dollar, the team believes it will likely hover around 70-80 cents to the U.S. dollar as it searches for direction in an uncertain environment for commodities and the global economy. The team assesses their investment decision-making building blocks of cycle, valuation, and sentiment as follows:
"We are concerned about the business-cycle outlook," Kshatriya said. "A more constructive view hinges on a olicy pivot from the BoC, which may require patience. Therefore, while valuations are reasonable and the equity sentiment is not alarming, our cycle concerns are an overriding factor that keeps us neutral in an absolute sense and a possible pause to Canadian equities outperformance. Relative value, however, favors Canadian over U.S. equities over the medium term." Global market outlook Globally, Russell Investments' strategists believe a recession seems likely in 2023 and equity markets may struggle, but an economic recovery should be on the horizon by year-end. "The main issue for 2023 is whether inflation pressures ease sufficiently to allow central banks to step away from rate hikes and potentially begin easing," said Andrew Pease, global head of investment strategy at Russell Investments. "We expect inflation will be on a downward trend as global demand slows. This should allow central banks to eventually change direction and may set the scene for the next economic upswing." Russell Investments' global asset-class views for 2023 include:
Looking toward 2023, the team offers the following asset-class preferences:
For more details on the outlook, the team's full report is available here. About Russell Investments Canada Limited Russell Investments Canada Limited is a wholly owned subsidiary of Russell Investments Group, Ltd. Established in 1985, Russell Investments Canada Limited has its head office in Toronto. About Russell Investments Russell Investments is a leading global investment solutions firm providing a wide range of investment capabilities to institutional investors, financial intermediaries, and individual investors around the world. Building on an 86-year legacy of continuous innovation to deliver exceptional value to clients, Russell Investments works every day to improve the financial security of its clients. The firm has CA$376.9 billion in assets under management (as of 9/30/2022) for clients in 32 countries. Headquartered in Seattle, Washington, Russell Investments has offices in 19 cities around the world, including in New York, London, Toronto, Tokyo, and Shanghai.
View source version on businesswire.com: https://www.businesswire.com/news/home/20221206005876/en/ |