Although the seasonality for the stock markets is actually rather weak at the moment, they made strong gains in May and recouped the losses from April. On the one hand, slightly lower inflation figures rekindled hopes of interest rate cuts, while on the other, companies once again delivered and presented good earnings figures (profit expectations were exceeded by around 8%). The absolute stock market favourite Nivida was even able to exceed the extremely high expectations once again. The companies are therefore still in a solid position.
Interest rates are heading south
In the coming months, however, we expect slightly weaker economic data (signs are increasing on the US labour market) and lower inflation figures (after goods prices, we also expect a decline in service prices). Interest rates are therefore likely to fall globally, which should provide a further tailwind on the financial markets. The Bank of Canada and the ECB are likely to start their cycle of interest rate cuts as early as June.
In this environment, the chances are intact that both bonds and equities will continue to perform well. Therefore, despite the considerable gains in the current year, we remain constructive in favour of traditional investments and retain a slight overweight in equities. In doing so, we are focussing on our sentiment and positioning indicators. Both are on the way to a sell signal. In view of the strong momentum, however, further price gains currently seem likely.