Horizon Handout April

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.