The leading economic indicators are painting both a light and dark picture. The US central bank (Fed) is sitting on its hands for now and has confirmed its existing pathway of restrictive monetary policy. This constellation is weighing on equities. US technology stocks are leading the global equities sell-off. Government bonds are appreciating strongly. Our basis scenario remains unchanged.

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.

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?

For much of the year, 2023 was characterised by a volatile investment environment. It was another challenging year for investors. Rising interest rates had a conflicting impact on bond investments. US technology stocks dominated global 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.

The third quarter of 2023 was characterised by turbulence of varying kinds. Further rises in key interest rates weighed on bond investments and the likelihood of an economic downturn acted as a drag on equity prices, while at the start of October the terror attacks in Israel dragged geopolitics back to centre stage.