Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Access both platforms from your single Saxo account.
Watch global logistics shares for global supply chain signals on coronavirus
Peter Garnry
Chief Investment Strategist
Summary: Logistics stocks have underperformed the global equity market since 17 January 2020 but overall the declines have not been severe enough to be called an all-out warning. Drilling deeper we observe the most stress among logistics stocks in China and Asia-Pacific (ex. China) and among industries we observe the worst declines in the marine shipping and transit services industries.
The coronavirus in China has still not peaked and mixed reports are coming out of China in relation to when production can be resumed in some regions of the country. Equities in general have been calm on the coronavirus outbreak with the real impact showing up in commodities such as crude oil which tells a tale of the world’s factory grinding to a halt. Within equities the epicenter is in the logistics industry group which was down 5% last Monday compared to the official start date of the coronavirus’ impact on financial markets. However, news flow was on balance positive last week pulling back equities as investors were betting on the coronavirus being contained fast enough to leave little impact on the economy. We take a more cautious view and believe the coronavirus could get much worse globally. As of this morning the Bloomberg World Transportation Index is down 3% from the close on 17 January 2020 which means that investors have not really discounted any meaningful disruption yet from the outbreak.
Underneath the index value the data tells more stories about where the impact really is. Across regions it’s clear that Asia-Pacific and China (a few of the larger names are pulling the weighted return into positive) are the two regions that are suffering the most which is not a surprise.
When we look at industries we observe that marine shipping and transit services (basically passenger transport by rail) are hit the hardest. So the global supply chain has seen a materially decline in activity also supported by the 83% drop in the Baltic Dry Index since August 2019. While shipping and transit services are flashing some signs of warning here the declines are not catastrophic but we recommend investors to watch these industries for guidance. The overall market cap weighted equity indices are broadly reflecting technology companies which are not living in the same physical world as manufacturing companies.
It’s worth noting that the transportation sector has not been an attractive investment over a five year period delivering less than 9% return while the global equity market has delivered 34%. In our technology-driven society our equity markets are no longer reflecting the underlying manufacturing economy but more a services and software economy.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)