The first half of 2024 delivered solid returns for equity investors in particular. For bond investments, rising interest rates were a mixed blessing. US technology stocks continued to dominate global equity markets.

The attention of the investment community is gradually turning to the US elections. The first TV debate confirmed existing expectations of the quality of the candidates. Away from the cameras, rates of inflation continue to develop constructively. Both equities and bonds have benefited from this development. Swiss investors have experienced something of a headwind given the stronger Swiss franc.

Equity markets were in the spotlight in the first quarter. Headwinds picked up a little towards the end. But despite some evidence of weakening, the economic data coming from the US has remained encouraging in recent weeks. Here in Europe, a process of normalisation is apparent. We therefore expect the growth environment to remain constructive with declining rates of inflation. What does this mean for the equity markets?

Investors have enjoyed pleasing returns over the last two months. Hopes of a soft landing for the economy, rapidly falling rates of inflation, and normalising capital market interest rates have provided a boost to almost all asset classes. The monetary policy stance of central banks confirmed this trend last week.

Equity markets consolidated over the summer months. The prospect of an economic downturn gave rise to uncertainty. Capital market interest rates barely declined, despite perceptible concerns over the development of the economy and lower rates of inflation. In the US, interest rates actually rose significantly. This environment opens up investment opportunities.

US technology stocks have soared in recent weeks. By contrast, equity markets as a whole have trended sideways. The focus now is on the increasingly pronounced economic downturn and its impact on companies. Inflation rates are still too high, central banks remain hawkish.

Our essentially positive expectations with regard to the first six months of 2023 were borne out. Mixed investment portfolios clawed back some of the losses of the previous year, with investors favouring equities, primarily European and US technology stocks.

The consequences of the rapid rise in interest rates have become all too apparent over the last few weeks. In Switzerland, turbulence in the banking sector triggered the downfall of Credit Suisse. Measures taken by central banks and government brought the situation under control, and the storm abated. The economic slowdown continues to gather pace, but companies are performing well. Time to adjust the compass.

Optimism proved the dominant emotion in the markets during the first few weeks of the 2023 investment year. The threats posed by inflation and risks of a recession disappeared almost entirely from the perception of investors. But a considerable amount of the ground gained was then conceded in February.

The 2022 investment year was truly challenging for investors. Rising interest rates and falling equity prices dominated large parts of an extraordinarily difficult year. Developments around the world were shaped by high inflation – a knock-on effect from the pandemic, which was exacerbated further by the war in Ukraine.

The last two months have been characterised by solid company results, a healthy labour market and stable consumer spending. Equity markets have recovered. And now US inflation data for October has supplied a further dose of good news.