Equity markets likely to remain supported until the end of the year

At a glance

Economics

• Weak growth in the eurozone, with no additional momentum expected until spring 2025.
• France and Germany are weighing on the eurozone. 2025 will see more growth due to falling interest rates and rising real wages.
• For central banks, the last few metres of monetary easing are the most difficult.

Equities

• Positive economic data, favourable seasonality and gradual interest rate cuts are supporting the US equity market.
• Global liquidity, hopes of a soft landing and Donald Trump's election victory are adding breadth to the market.
• We remain optimistic for the end of the year. In Europe, the negatives seem to be largely priced in.

Bonds

• Trump's policy agenda (tariffs, immigration, debt) increases the risk of inflation. We are keeping duration close to neutral.
• Euro IG credit has positive fundamentals, but increased risk of setbacks. HY offers selective opportunities.
• EM local currency bonds are an attractive portfolio addition.

Commodities

• Gold corrects after Trump victory, but remains supported by central bank buying and geopolitical risks.
• Crude oil sideways for now. Price rise unlikely without geopolitical escalation and strong demand growth.
• Industrial metals weighed down by potential trade wars following Trump's victory. Long-term drivers remain intact.

Currencies

• Politics, not central banks, are driving exchange rates.
• The US dollar currently has a lot going for it – but the wind could change somewhat in the coming year.
• The strong franc is a cause for concern for the Swiss National Bank.