Credit Suisse cuts equities allocation on Omicron and policy risks

FILE PHOTO: The logo of Swiss bank Credit Suisse is seen in Zurich

MILAN (Reuters) – Credit Suisse on Tuesday downgraded equities to neutral from overweight, citing near-term risks associated with the highly infectious Omicron virus variant at a time when high inflation could lead to tighter monetary policy.

“Even though we do not foresee a situation as drastic as at the start of the pandemic, we could face a situation in which the growth prospects are waning while central banks are forced to tighten liquidity at the same time,” the investment committee of the Swiss bank said in a report on Tuesday.

Credit Suisse kept a “slight cyclical tilt” in portfolios. It said “equity markets have upside potential over a 6-month time horizon, as our base case still calls for robust global growth to be maintained over the medium term.”

It also cut UK stocks to neutral citing “deteriorating” earnings.

(Reporting by Danilo Masoni; editing by Carolyn Cohn)