The group's director of asset allocation said they expected economic data to bounce back in Q2 as a severely disrupted supply chain returned to work and pent-up demand was satisfied.
Referencing his 'investment clock' model of historical asset class and sector performance, Greetham added he was feeling more bullish on equities than on commodities, suggesting the supply-induced strength in the commodity sector – which had outperformed equities year-to-date – was likely to fade.
Parallels with 1990s
He said: "We are concerned about the slowdown in China but we see a parallel with the 1990s when developed equities climbed a wall of emerging market worry."
With the 'Investment Clock' currently in equity-friendly recovery mode, Fidelity is maintaining its long-held preference for stocks over bonds.
"We expect to see US dollar strength and a rise in bond yields over the next few months," he added.
On inflation, Greetham said global pressures were muted, saying that any sustained economic weakness would trigger further stimulus from G4 central banks.
"Today is reminiscent of the 1990s when emerging markets saw a series of crises but the big central banks maintained a relatively easy stance," he said.
Fidelity's house view is strongly overweight US equities, and Greetham said any QE tapering impact would likely be offset by easing fiscal headwinds.
Overweight Japan
"Our funds are also overweight Japanese equities, buoyed by the level of expected government support ahead of April's sales tax increase."
He added that excess capacity, dollar strength and slower trend growth in China were structural headwinds for commodities, with gold remaining the team’s largest underweight.
"We remain cautious on government bonds because of the Fed’s increased QE tapering and yields are still low," he concluded.
