Analysis

Dividend cuts across the board over the past year are having an impact on UK Equity Income sector's returns despite stock market rally

At a recent Schroders conference, it became clear to me that both clients and fellow investors were drawing the conclusion that my team reached some time ago: all roads now lead to emerging markets.

We continue to be bullish on the outlook for US equities over the next 12 to 18 months, but also continue to believe an intermediate market correction is increasingly likely. The only question is how severe it will be.

Investors' risk appetite has returned. General equity markets have recovered strongly in recent months.

Despite the rally in risk assets over the past six months and talk of an economic recovery, some of the biggest macroeconomic questions remain unanswered.

Global emerging markets attract strong investor interest despite high risk reputation

The attempted harmonisation of European economies through monetary union cannot be described as an overwhelming success story.

Assets are still attractively valued while earnings are keeping pace with prices and interest rates remain historically low.

Global economies are showing tentative signs of improvement, but not sufficient yet to encourage policymakers to materially alter their highly accommodative monetary and fiscal initiatives.

The American stock market is having a good year. From its low point of 677 on 9 March 2009, the S&P 500 index has recovered by over 60%.