Risk assets rally further as double-dip fears ease

ON ASSET ALLOCATION

Santander's Toby Vaughan discusses why he is retaining his overweight position in equities.

Weather conditions failed to suppress the rally in risk assets during the final quarter of last year, with a range of factors driving the continued recovery. The primary support came from the improvement in the global cyclical backdrop, as investors became comfortable with the reduced likelihood of a double-dip recession. Improved economic data and an aggressive policy response in the US were the catalysts, which combined with a healthy corporate sector and unchallenging valuations to produce rising stock markets. Looking ahead, we continue to believe the backdrop is favourable, altho...