Global equities are likely to continue their rally and break out of the recent lull as downside risks are only transitory, analysts told CNBC.
- UBS Global Wealth Management Chief Investment Officer Mark Haefele said the recent uptick in inflation is not a long-term threat to the overall rally, and it is unlikely that a sustained spike would drive central banks to tighten policy.
- Haefele does not expect the rise in input prices to be a significant headwind for earnings, and this will be offset by revenue growth.
- UBS believes that equity markets can continue to climb with cyclical stocks as the global economy recovers from the COVID-19 pandemic.
- Barclays Head of European Equity Strategy Emmanuel Cau said investors will continue to buy dips as companies report strong earnings, the abundant liquidity, and high bond and cash holdings.
- According to Cau, value stocks currently offer better risk-reward than cyclicals as the reflation trade stalls.
- Canada Life Asset Management CIO David Marchant believes the market may be underestimating the scale of economic recovery as firms start to see an increase in sales.
- Cau said equities will probably stay up and may continue to drift higher, but called on investors to be cautious and selective given the downside risks.