Savings and autumn challenges

Today, however, the main cause for concern seems to be related to the surge in the price of gas, which has skyrocketed above a record 290 MWh in recent days. And although this immediately retraced below this threshold,the signal was enough to increase fears of a further inflationary surge and raise winds of recession for several economies.

Between declines and rebounds, the balance since the beginning of the year for the major international stock exchanges is negative so far. From January to Aug. 22, Piazza Affari's Ftse Mib index fell about 18 percent while Frankfurt's Dax 30 lost nearly 17 percent. It has not fared much better for the Cac 40 in Paris, which has given up more than 11 percentage points in nearly eight months while the S&P 500, which groups the stocks of the largest listed companies in the United States, has lost more than 13 percent. Also to be noted in all this is the depreciation of the euro against the dollar, now at 20-year lows and even below parity. What to expect now, between now and the end of the year?

Learn more about the history of the euro/dollar exchange rate in this article:

https://www.bancagenerali.com/en/blog/storia-e-contesto-euro-dollaro

The autumn of 2022 will therefore arrive with still many questions waiting to be answered. What will happen in the commodities market? What direction will gas prices take? What effect will this scenario have on the level of inflation? And how will central banks behave in the coming months? What impact might future interest rate hikes have on growth? Yet not everything is so negative, quite the contrary. In the face of this slew of unknowns, it is advisable for investors to behave as is always appropriate in times of uncertainty: rely on a good financial advisor capable of building a well-diversified portfolio capable of seizing the opportunities that will arise anyway. Equipping oneself with a good dose of liquidity (greater than that present in "normal" conditions) may prove to be an interesting move to then position oneself in the equity markets in a gradual manner and aim for significant returns in the medium and long term. Better to move cautiously, in short, while being aware that a well-diversified portfolio should still include the major asset classes, from stocks to bonds to commodities.

Summing up the context, it is possible to say that there are two main unknowns for markets this coming autumn: inflation and high energy prices. However, the restrictive action taken by central banks (which have already raised interest rates) should result in a calming of inflationary pressures that may now be nearing a peak. Indeed, in the International Monetary Fund's most recent projections, the rate of price growth is expected to reach 6.6 percent this year in advanced economies (thus falling from the highs) and 9.5 percent in emerging economies. As mentioned earlier, however, any disruptions in gas supplies from Russia are a source of potential higher energy prices and consequent rise in global inflation.

As far as individual asset classes are concerned, the declines experienced during 2022 have undoubtedly brought the major global equity indices back to attractive levels that are below the averages of recent years. Although elements of uncertainty are expected to remain in the short term, equities now present elements of great interest for those seeking to pursue medium- to long-term wealth planning strategies.

On the bond front, however, after rate hikes and subsequent declines in bond prices, yields have risen significantly since the beginning of the year. Despite the peaks reached in mid-June, however, there are no concrete signs that the level of inflation is stabilizing. Which could (but the conditional is a must) lead central banks to further monetary policy interventions. Even in bonds, in short, there are several unknowns to weigh well on the scales.

The scenario is also complex with regard to commodities. As long as geopolitical tensions and supply/demand bottlenecks remain, crude oil and oil product prices should, in the short term, remain at still high levels. But there are also downside risks to prices should there be a global economic slowdown. Similar considerations, albeit from a different perspective, apply to gold and precious metals. In the current scenario of uncertainty and high inflation, the yellow metal usually remains attractive because of its function as a safe-haven asset. However, if the price rise were to have peaked and then retrace, gold prices could also suffer in the short run.