Global Asset Allocation Perspectives

April 2024

To help guide the positioning of Scotia Portfolio Solutions, the Multi Asset Management team of Scotia Global Asset Management meets regularly to discuss and debate the current macro environment and what it means for portfolio positioning. The following report captures the team’s current views.

Key macroeconomic themes

Global economic themes that are most likely to influence our views on portfolio asset allocation over the next 12-to-18 months.

Growth, while resilient, is expected to be challenged

Global growth will continue to be challenged in 2024 as the lagged impact of higher interest rates continues to play out. A recession can’t be ruled out, but we currently do not expect it to be deep or prolonged should it occur.

Inflation still a concern, rate cuts likely later in year

Disinflation will likely continue, but core inflation remains stubbornly high. In the first half of 2024, most central banks will likely remain cautious fearful of inflation reacceleration. In the second half, they will likely start cutting rates.

Risks remain

The impact of higher interest rates continues to be a source of risk and leading economic indicators point to further challenges down the road. The ongoing rally in equities has created the opportunity to take on a more defensive position given the uncertainty that remains in our outlook.

Asset allocation perspectives

Equity outlook


We recently shifted to a neutral view on equities given the abundance of conflicting economic indicators.

Global equity markets, led by the U.S., continued to rally and investor sentiment remains bullish. The continued resilience of economic activity in the short-term is countering expectations for a more meaningful slowdown. U.S. fiscal policy continues to be a key counter trend as government transfers have shifted to technology businesses and reshoring. Stubborn inflation and concentrated markets remain the key risks to monitor. 

We’re keeping our ear to the ground to take advantage of opportunities to change our view should they emerge.

Fixed income outlook


We also have a neutral view on fixed income relative to equities as risks to both are roughly in balance.

Overall fixed income returns treaded into negative territory as investors dialed back their interest rate cut expectations which caused bond yields to rise over the quarter.

Attractive income over the longer term offered by current yields is countered by the risk of capital losses from potentially higher yields that may materialize over the coming quarter.

Within fixed income, we saw positive performance in the corporate and high-yield segments as credit spreads narrowed.



In Canada, higher interest rates have had a more meaningful impact on the economy and inflation when compared to the U.S. With that said, it is highly likely that the Bank of Canada will cut interest rates before the U.S. Federal Reserve, which may create near-term positive sentiment.

Generally, Canadian equities are also priced well below U.S. equities and longer-term secular tailwinds appear favourable. We are slightly overweight Canadian equities. 



In the U.S., core inflation remains stubbornly high, equities continue to see positive momentum and economic growth remains resilient.  The U.S. market appears best positioned to weather a global slowdown relative to other regions. 

Despite stretched valuations, U.S. equities appear poised to continue to benefit from several growth themes, most notably artificial intelligence, manufacturing reshoring and renewed infrastructure investment. We are overweight U.S. equities. 



We continue to have a bearish view on the Eurozone. Structural headwinds in global competitiveness, coupled with uncertainties regarding the sustainability of exports to China, contribute to this negative outlook.

Japanese equities are likely to outperform over the medium term as the Yen remains weak and demand for Japanese equities remains strong. However, this is not enough to offset our Eurozone concerns. Overall, we are underweight international equities.

Emerging Markets


The Chinese Government continues to signal for policy easing and additional stimulus. Its property sector continues to be challenged. Emerging markets outside of China showed signs of robust growth and positive earnings.

Overall, emerging market equities have underperformed year-to-date and are relatively cheap. We maintain a neutral view on emerging market equities given heightened geopolitical risks and the uncertainty of Chinese growth.