These risks have the potential to further weigh on global markets, at least in the near term.
However, such risk aversion is likely to be short lived, given continued central bank accommodation in much of the world and some modest improvement in economic growth.
As such, we remain overweight stocks, cyclicals and credit. As for the transports sector, we remain neutral on the broader industrials sector because of its stretched valuations, and we wouldn’t see the current pullback as an opportunity to add exposure.
Rather, within cyclicals, we prefer the technology and financials sectors.