The latest survey shows that investors are feeling cautious about global equity markets in the fourth quarter compared to the third quarter. The uncertainty surrounding economic conditions, including geopolitical tensions and inflation, is causing concern among investors. According to Peter Garnry, Chief Investment Strategist at Saxo, clients are divided in their beliefs about the markets due to the increase in geopolitical risk and the upcoming US election in November.
Geopolitical tensions, the US election, and interest rates are the primary worries for investors, with global conflicts and economic sanctions contributing to the unease. The upcoming US election and rising interest rates are also major concerns. The proximity of the US election, just a month away, is heightening anxiety among investors.
In terms of sector performance, technology, energy, and healthcare are viewed as the top sectors by Saxo clients. However, there has been a decline in confidence in the technology sector compared to the previous quarters, likely due to underperformance in US technology stocks. Surprisingly, utilities, which have been the best-performing sector in the past three months, are not receiving much conviction from investors.
When asked about which region will perform the best in the fourth quarter, the majority of clients are betting on North America. Europe, on the other hand, is seen as the worst-performing region for the quarter, a sentiment that has been consistent throughout the survey. Despite concerns about the US budget and the upcoming election, American companies have been outperforming European ones, with the S&P 500 index showing almost three times the return of the EUROSTOXX 600 index.
Overall, investors are approaching the fourth quarter with caution, keeping a close eye on geopolitical tensions, the US election, and interest rates. The uncertainty in global markets is leading to a lack of conviction among investors, who are looking to navigate these challenges in the coming months. The performance of different sectors and regions will be closely watched as the year comes to a close.