The investment outlook is significantly more stable than it has been in recent years. Inflation has continued to ease and major central banks have begun their interest rate easing cycles, which is helping financial conditions improve and supporting growth assets. We are also seeing corporate earnings improving beyond the very large US technology cohort recently dubbed the Magnificent-7.

This reflects what appears to be a re-acceleration in the US economy with some improvements in surveys of the service sector and with signs of stability in the labour market after concern in recent months due to rising unemployment. Despite signs of weaknesses in some segments, aggregate consumer spending has continued to grow.

Meanwhile, after three years of challenges in the Chinese property sector, including various failed attempts by authorities to shore up the market and restore confidence, recent announcements seem to indicate more decisive support is imminent. In Europe, however, the manufacturing sector continues to be in the doldrums with growing competition from China, particularly in the auto sector. That said, consumer services appear to be holding up well, especially in southern Europe.

For UK investors, it’s hard to ignore the new government’s first Budget, scheduled for 30th October. The Chancellor Rachel Reeves has made no secret of the fact that those with the broadest shoulders will bear the greatest burden. We wait with bated breath to see what she means by that. This adds yet more delay to the long-term investment decisions that will ultimately drive improved growth.

We do have some concern about the largely inflationary consequences of growing geopolitical unrest, especially in the Middle East, and a hotly contested US election, not to mention a reaccelerating US economy, but markets don’t seem to be overly concerned for the time being.

Therefore, we expect the market’s recent positive momentum to continue into what is seasonally a strong period. As such, we think it is makes sense to keep the balanced approach to portfolios that we have kept for the last several months, staying close to our long-term strategic allocations. This balance includes both cyclical and defensive sectors, together with exposure to key investment themes like AI and the energy transition.

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Please remember, this content is provided for information purposes only. Investment involves risk. Past performance is not a guarantee or indication of future results. Investment return and the principal value of an investment may go up or down and may result in the loss of the amount originally invested. All investors should seek professional advice prior to any investment decision, to determine the risks associated with the investment and its suitability.