sentix ASR Essentials 46-2016


Ties that bind EM and Commodity sentiment loosen

The fallout from the US election result continues to overhang market sentiment. In equities, the latest sentix survey points to a sharp downward reversal in investors’ medium-term strategic bias on Eurozone equities relative to the US, perhaps reflecting an underlying change in relative economic expectations. At the same time, the latest monthly sentiment readings on emerging market (EM) equities as an asset class have also sharply fallen, in a development that chimes with increased optimism on the outlook for the US Dollar. It is less consistent with commodity sentiment that has only modestly weakened from the levels of a month ago. It appears that the close ties between EM and commodity sentiment have been loosened near-term by the outcome of the US election (Charts 2-4, p2).

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