Market turnaround – Europe strong, US stocks under pressure

At a glance

Economics

• Planned spending package can strengthen German growth in conjunction with reforms.
• President Trump's tariff policy is jeopardising the upturn in the eurozone and the domestic economy in the medium term.
• Interest rate cuts by central banks are likely to come to an end soon - but uncertainty is high.

Equities

• US equities suffer from negative economic surprises and Trump's tariff policy. Selective opportunities due to correction.
• European equities with a strong start to the year. Cyclical economic sectors are benefiting from several factors.
• However, Europe has already come a long way and could consolidate for the time being.

Bonds

• Negative US economic surprises and the ‘DOGE’ austerity measures are causing US yields to fall.
• Trump's policy agenda (tariffs, immigration, debt) increases the risk of inflation. We are keeping duration close to neutral.
• High cash inflows and solid fundamentals continue to speak in favour of credit despite expensive valuations.

Commodities

• Gold remains supported in the medium term. However, the price is difficult to justify using standard valuation methods.
• The supply of oil remains plentiful, but the price must be right. The downside risk should therefore remain limited.
• Industrial demand for copper and aluminium remains stable. Infrastructure programmes are providing additional support.

Currencies

• Geopolitics and trade policy move the currency markets.
• Europe and the euro emerge from their state of shock.
• SNB tries to counter low inflation and strong franc.