“Usually when I talk to the managers it is all about bottom up stock selection and individual companies. Financials have been a really important mover within portfolios though, and quite a positive one at the moment,” she explained.
Hudson said there has been recognition of progress in the banking sector on both the regulatory front and in terms of building up levels of capital.
This has led to a normalisation of the role played by financials in the markets as opposed to the drag they have contributed since the financial crisis.
The factors that continue to weigh on markets are at the macro level, in the form of statements from authorities regarding QE.
Minutes from the Federal Open Market Committee released on Wednesday suggested the Fed is going to “stop feeding investors the sugary panacea of QE," she said.
Equities reacted quickly to this – on the downside – which in turn firmed up bond markets, showing just how important QE is perceived to be in US.
Meanwhile the UK flipped the other way, responding negatively to signs from the Bank of England that the printing presses could be fired up again.
“In the US they want this support while in the UK the idea is if you need this support it’s bad news,” Hudson concluded.
