We have moved our stance on US equities from neutral to overweight. The outcome of the recent US elections reinforces the already positive direction of US fundamentals, with growth and inflation coming into better balance, continued upgrades to earnings expectations and Fed policy loosening. As such, we have tilted our outlook in favour of US equities, despite rich valuations, as they stand out as a clear regional winner on a relative basis.

We maintain our underweight view on European equities. In addition to earnings growth staying muted and more negative revisions, potential tariffs on European goods from the new US administration are likely to represent additional headwinds for European equities. Currently, we do not see a compelling catalyst for outperformance in the region and, as such, maintain our underweight position.

We have downgraded our view on Japanese equities from overweight to neutral. Domestic policy uncertainty offsets the ongoing positive of improving corporate governance. While we remain constructive on Japan’s case structurally, these factors led us to reassess our shorter-term view.

Our view on emerging markets (EM) equities remains neutral. There have been no significant changes from last month besides some initial — and more positive — signs of stabilisation in China, including an increase in share buybacks and short-term earnings expectations gently moving higher. However, we think continued caution is warranted, due to a weak and uncertain long-term earnings growth picture and a lack of visibility on how the policy measures that the Chinese authorities announced recently to counter the economic slowdown will be implemented. More broadly, a potential increase in tariffs following the recent US elections also represents an additional headwind for EM equities.

We moved to an underweight position in US rates, due to persistently strong economic growth and rising concerns around debt sustainability following a Republican sweep in the US elections.

We upgraded our view on European rates from neutral to overweight. The European economic outlook appears more fragile compared to the US. Meanwhile, weaker growth and more progress on inflation in the region suggests further potential for rates to decline across the curve, supporting bond prices.

We maintain a neutral view on Japanese rates, given our expectation that the Bank of Japan  will prolong its normalisation cycle. In addition, with ongoing domestic policy uncertainty following the recent election, we are comfortable in remaining neutral. 

Our neutral stance is unchanged, given that we see no clear catalyst for spreads to widen from their current tight levels. We still advocate a tactical approach to credit allocations, and anticipate that spread volatility may offer an opportunity to upgrade our view at better levels.

We have adopted a neutral perspective on high-yield credit, a stance that we transitioned to last month after having had an overweight view since the beginning of the year. At the current spread levels, the upside potential of the asset class, relative to others, looks more limited.

We maintain our neutral position on emerging markets (EM) debt. The combination of possible upcoming tariffs, a strong US dollar and persistently elevated geopolitical uncertainties creates a challenging environment for both EM fundamentals and demand, informing our neutral take.

We maintain a neutral view on energy markets. While we believe that economic growth will continue to support oil prices next year, there is an increasing risk following the US elections that supply may rise, negatively affecting prices in the new year.

Our overweight view on gold remains unchanged. Despite its significant outperformance this year, we believe there are compelling reasons for this trend to continue, including central bank buying, strong ETF demand, and anticipated interest-rates cuts. We see limits to the rise in yields that hurt gold prices recently and think geopolitical and inflation risks could reassert gold’s safe-haven status.