The second half of 2016 will bring further geopolitical uncertainty and market volatility, says a report from State Street Global Advisors. Its ‘Global Market Outlook’ for the second half of the year advises investors to think differently about their strategic approaches following the referendum in the UK to leave the European Union. That vote, along with other geopolitical concerns such as ongoing conflicts in the Middle East, will add volatility. “We expect that spikes in volatility triggered by a range of geopolitical factors will continue to characterize markets for the remainder of the year,” says Richard F. Lacaille, its executive vice president and global chief investment officer. “The Brexit vote outcome will be a primary source of volatility, particularly in the short term, but also in the coming months as the process unfolds. Longer term, volatility is likely to remain a feature of markets as they contend with broader global growth concerns, the capacity of central banks to stimulate economies, and other geopolitical events, including elections in the U.S. and across Europe.” Overall, the report says global equities look favourable for the rest of the year, while global government fixed income will perform the worst of all asset classes.
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