Horizon Handout April 2024

Economics

• USA: Fiscal policy supports economy despite high interest rates. Europe: stagnation in winter, upturn in spring.
• Price pressure has eased considerably on both sides of the Atlantic – but not permanently to 2%.
• In view of falling inflation rates, we expect the FED, ECB and BoE to make the first interest rate cuts from June 2024.

Equities

• Equity indices could rise slightly by the end of the year. US without further major valuation increases.
• Small caps offer more potential, also supported by increasing M&A transactions.
• The focus is on quality growth stocks with high earnings growth rates; Latin America remains an attractive addition.

Bonds

• After a weak start to the year for government bonds, British securities in local currency promise recovery potential.
• In European corporate bonds, we avoid high-yield securities, while bank bonds offer selective entry opportunities.
• In the emerging markets, falling interest rates make the local currency bond segment particularly attractive.

Alternative investments / commodities

• Crude oil benefits from geopolitics and higher demand, but supply remains plentiful. Volatile sideways movement likely.
• Gold reaches new highs, driven by technical drivers and physical demand.
• Industrial metals await the recovery in the manufacturing sector. Supply remains structurally tight.

Currencies

• The ECB, Fed and BoE are likely to initiate their interest rate reversals close together later in the second quarter.
• The exact sequence of the first rate cut could cause volatility in the short term but should be irrelevant in the long term.
• In the medium term, interest rates in the US are likely to be just under one percentage point higher than those in the eurozone.