Capital Market Outlook of Berenberg Wealth and Asset Management - compact outlook on capital markets, economy, equities, bonds, economics and currencies.
Economics
President Trump's customs policy is jeopardising the upturn in the eurozone and, in the medium term, the domestic economy.
Domestic demand in the UK is strong, but exports are weak.
Central banks are almost at the end of the line with interest rate cuts but are keeping all options open in uncertain times.
Equities
No regional preference in the short term following the fundamentally and valuation-driven outperformance of Europe.
Europe relatively favourably valued, but USA supported by weaker USD and rebalancing flows at the end of the quarter.
A possible US economic slowdown in Q2 and trade disputes could noticeably increase volatility.
Bonds
The scope for monetary policy remains small for the Fed. Germany and the UK, however, appear attractive again.
Corporate bonds remain interesting thanks to their attractive real yields. Low risk premiums jeopardise the short term.
Emerging market bonds should receive a tailwind due to brightening economic data from China.
Alternative investments / commodities
There is plenty of supply on the oil market, but not at every price. Sideways movement likely for the time being.
Gold tops USD 3,000 per ounce. Global uncertainty and rising government debt provide support.
Defence and infrastructure spending should further boost demand for industrial metals in the long term.
Currencies
Geopolitics and trade policy move the currency markets.
Europe and the euro emerge from their state of shock.
The Swiss National Bank tries to counter low inflation and the strong franc.