Market tensions highlight valuation gap

The third quarter more or less resembled the prior quarter. Equity markets were unable to find a clear direction and determine if the glass is half-empty or half full. Consequently, the pendulum continued to swing between bullish and bearish markets.

There were weeks in which recession fears, political inertia and the trade war took the upper hand and other periods in which sentiment quickly improved on the back of specific actions by central banks step or when a solution to the trade war seemed closer. Although equity markets have been zigzagging during the third quarter, the returns were reasonable. Global developed markets - as measured by MSCI World - gained about 5 percent in euro terms, although that was largely because of a strong U.S. dollar, which rose 4 percent against the euro. Meanwhile global emerging markets – as measured by MSCI EM - were flat. 

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