Emerging problems with Portugal’s banking sector have renewed concerns about the health of European banks, and ongoing tensions in the Ukraine, Iraq and Syria have investors worried, said Threadneedle chief investment officer Mark Burgess.
In the US, the Federal Reserve has signalled that its bond-buying program will come to an end this year, he said.
But investment markets have largely taken these developments in their stride, said Mr Burgess.
“While this has suited our pro-equity stance, it has left us somewhat puzzled as the rise in core yields that we expected at the start of 2014 has not materialised,” he said.
Threadneedle remains “constructive” in its equities outlook for the remainder of the year – with overweight positions in the UK and Japan.
“For us, the real challenge will be to ascertain when the valuation re-rating of equities runs out of steam,” said Mr Burgess.
“With the notable exception of the US, earnings growth is simply not coming through fast enough to allow equities to make a lot more progress from current levels,” he said.
