Horizon Handout May

Capital Market Outlook of Berenberg Wealth and Asset Management - compact outlook on capital markets, economy, equities, bonds, economics and currencies.

Economics

  • The US tariffs pose a significant threat to the economic recovery in the Eurozone.
  • The USA is the main victim of Trump’s tariffs chaos.
  • ECB and BoE cut key interest rates further, while the Fed’s hands are tied.

Equities

  • (US) equities are suffering from uncertainty over tariff policy and its impact on the economy and companies.
  • US earnings expectations and valuations remain stretched despite the recent correction, while Europe is cheaply valued.
  • A possible slowdown in the US economy in the second quarter and trade disputes could lead to further volatility.

Bonds

  • Trump's tariff policy jeopardises investor confidence in the USA. ECB remains on cautious course of interest rate cuts.
  • European corporate bonds recently under pressure from Trump tariffs. Investor uncertainty reflected in outflows.
  • The emerging bond markets are characterised by Donald Trump's global economic uncertainty.

Alternative investments / commodities

  • Sideways movement likely. Prices below USD 60/barrel only realistic temporarily or in the event of a (US) recession.
  • Gold continues to be sought after as a safe haven and reaches a new all-time high. However, risk of a correction is increasing.
  • Trump's considerable tariff surprises are weighing on industrial metals. However, structural drivers remain intact.

Currencies

  • Trump tariffs cause US dollar to plummet.
  • The euro wakes up from its deep sleep.
  • Beijing uses renminbi to avert damage from trade war.