Investors are far more concerned about inflation, monetary tightening and recession risks that US midterm election results. In a way, a gridlocked government would remove uncertainty over new regulations and taxes, and make further stimulus less likely.
Rising inflation amid shrinking gas supplies from Russia is pushing Europe to the brink of recession, but there could be a long-term silver lining. Europe’s response includes measures to accelerate the shift to renewable energy sources and remove hurdles that slow new projects.
Asia will undoubtedly feel the knock-on effects of a downturn in US economic growth, but that does not mean the recovery will end. Decreasing exposure to the US market, the ongoing economic reopening and recovery in domestic consumption will cushion the impact.
Ageing societies and the pandemic-induced shock to the medical system will drive spending to address capacity shortfalls and improve long-term care services. Meanwhile, a growing middle-class population and the rising cost of living call for greater spending on affordable housing and education.
The need for food, water and energy sustainability is higher than ever as urban populations grow and the effects of climate change play out across the world.
An increasingly stagflationary environment has reversed the traditional relationship between the two asset classes, with both bond and stock markets struggling amid high inflation, slowing growth, rising interest rates and a hawkish Federal Reserve
Soaring food and energy prices as a result of the Russia-Ukraine conflict has set countries on a path to increased self-sufficiency which, far beyond the present geopolitical conflict, will help them meet the challenges of life on a warming planet.