As 2017 draws to a close, the question increasingly on investors' minds is where they can make money in 2018. Below is a summary of our key macro and market views.
- Strong global macro backdrop. Going into 2018, the global economy is in the best shape it has been in six to seven years. In The Big Picture: Global economy still on a roll, we argue that the global expansion is set to continue, albeit in a slightly lower gear than in 2017, as we expect a slowdown in China to weigh slightly on global activity. Still, the global economy is set to continue growing above the trend rate next year, driven increasingly by fixed investments, which have widely been the missing link in the global recovery until this year.
We look for core inflation in the US and euro area to increase only gradually. The main reason for this scenario is our expectation that wage demands will continue to be fairly moderate and that the Chinese slowdown will reduce the inflationary impact of commodity prices.
The benign inflation picture should allow the central bank exit to take place at a measured pace. Adding to the positive picture is the lack of big risk factors to growth at the current time. On our watch list, though, is the Italian election next year, North Korea and the tensions in the Middle East.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.