A look at H1 2018
On July 10, Charles Schwab (SCHW) presented its forecast for the second half of the year. According to the report, the financial sector was negatively affected by trade tensions as well as higher rates in the first half of 2018. However, the yield curve, which is becoming flat, also affected the financial sector.
In H1 2018, the asset management industry saw an impact due to expectations for higher rates. Asset manager performance depends largely on the performance of equities. In H2 2018, payment processors might experience a hit in their volumes, as consumer and business confidence might fall amid trade worries.
What Charles Schwab says for H2 2018
According to Charles Schwab, H2 2018 is expected to be beneficial for the financial and technology sector because of the improved US economy. However, the risks of trade wars could continue to be an obstacle for companies in H2 2018.
Charles Schwab’s advice for investors
In Charles Schwab’s report, the company suggests that the markets could be volatile and that investors need to adopt the strategy of diversification while making investments. In addition, the firm suggested that before investing, an investor should have a look at the target sector’s composition. This is important because if the target sector consists of a large number of stocks that are very sensitive to trade wars, the sector might witness a downtrend.
As a result, ETFs like the iShares PHLX Semiconductor ETF (SOXX) and the Invesco QQQ (QQQ) could witness the impacts if the technology sector falls, as these ETFs are tech-focused. If these ETFs fall, it could impact the stock prices of BlackRock (BLK) and Invesco Limited (IVZ).